By Grant Ferowich
Ether’s price dropped to a one-month low of $275 Monday after reaching $347 just one week earlier.
The second-largest cryptocurrency behind bitcoin with a market capitalization of $27 billion, ether looked above the $400 price level for a brief period on June 12 before cooling off.
In December 2016, a unit of ether could’ve been snapped up for about $7 or $8, making its rise one of the most lucrative investment performances of 2017. This is true even at the $275 price level.
“Ether failed to stay above the $286.00 support” against the U.S. dollar, technical analyst Aaysuh Jindal wrote Monday. “The bearish momentum is strong on ETH/USD, according to the 2-hour chart, as technical indicators keep heading lower and Ether’s price extends below its moving averages.”
During the first half of the year, analysts floated the idea that ether could overtake bitcoin atop the hierarchy of cryptocurrencies. The cryptocurrency underpinning initial coin offerings and decentralized application development has dipped since June without recovering.
One factor playing a role in ether’s long-term value is the regulatory environment surrounding ICOs.
The People’s Bank of China (PBoC) outlawed ICO capital raises on September 4, designating token launches “illegal and disruptive to economic stability.” A few weeks later, South Korea’s Financial Services Commission, a financial regulatory body, followed suit in making coin sales “a violation of the capital markets law.”
In July, the U.S. Securities and Exchange Commission sent out a bulletin stating that some ICOs qualify as securities. “If they are securities, the offer and sale of these virtual coins or tokens in an ICO are subject to federal securities laws,” the SEC said. But the SEC said a lot by what it omitted: if a token doesn’t qualify as a security it won’t be subject to securities laws.
A law firm in California is exploring a lawsuit against Tezos and its founders for securities violations after completing a historic $232 million ICO in July. Whether or not tezzies are deemed to be a security or not will have a major impact on how much damages U.S. investors will be able to claim, and indeed, whether the suit gets levelled at all.
“If the Tezos tokens are ‘securities’ sold to U.S. investors, the law requires the sale to be registered with the SEC. Here it is clear that the tokens were never registered. In this situation, one of the chief remedies is recession of the transaction. U.S. investors could get their money back,” writes the Restis Law Firm.