Big surge! Regulation!

The market has reversed, and as predicted, the market is going up. Why do we have to talk about regulation again?

Because we must be one step ahead, predict in advance, avoid in advance, and plan in advance.

It was previously predicted that the CPI data on May 15 would be lower and expectations would improve, so we planned in advance around 60,800. The rebound has been achieved, and it has been achieved very quickly. Of course, we have to talk about the next event.

Back to the topic, the background of the regulatory event:

A highly anticipated legislation promotes the vote on the FIT 21 bill to be held on May 23-24. The bill was drafted by Patrick McHenry, chairman of the House Financial Services Committee, and is the first comprehensive attempt at a federal level to establish a regulatory framework for cryptocurrencies.

The content of the bill is as follows: (Figure 1)

From the disclosed data, there are several key points:

1. This bill is supported by both parties, so it is likely to be passed.

2. The bill defines clear regulatory agencies: CFTC and SEC, and establishes law enforcement powers.

3. The Securities Act has been amended to clearly distinguish between "securities" and "investment contract assets", that is, the difference between ordinary tokens and security tokens. In addition, "investment contract assets" have been defined to facilitate the distinction between "security tokens".

In short, if the legal provisions may not be clearly interpreted and the regulatory power may not be standardized because cryptocurrency is an innovative industry, the regulation of cryptocurrency will become easier after the signing of this bill.

In the future, there may be no problems such as "failed to sue XRP" and "successfully sued by Grayscale".

Is regulation a good thing or a bad thing? What is the impact on the entire circle? This article will discuss this issue.

The regulation of cryptocurrency is now the most critical to the United States. As the global big stick, it coincides with the approval of Bitcoin ETF and the eve of the review of Ethereum ETF (before the end of the month). The influence of the United States is unprecedented, and regulation is in line with common sense and natural.

We must understand regulation because its importance is absolutely beyond the imagination of many people and is related to the investment of each of us.

But don’t over-interpret the regulation, because the regulation will only target certain sectors, certain fraud projects, and even scams, which is relatively not a bad thing.

Since June 2023, the SEC has initially listed about 100 tokens as suspected of token securitization. For a period of time afterwards, the performance of these tokens was not satisfactory. It was not until a few months later that the market eased and the SEC relaxed, and many security tokens began to explode (SOL, ICP, etc.), but most of them still did not perform well enough.

Regarding the possible regulation in the future, Brother Wang will answer some questions that everyone is more concerned about today.

1. What is the regulatory risk of SOL.

Recently, the regulation has been re-mentioned. In this wave of rebound, the performance of security tokens is also not good enough. The best performance is SOL.

Regarding the issue of SOL's security tokenization, I have said in my previous article that this project is too deeply involved with American capital and institutions, so the definition of SOL is even more difficult to define as a security than ETH.

On this point, everyone can rest assured that the possibility of SOL being defined as a security is even lower than ETH.

If it is really positioned as a security, the two major transactions of FTX before, and the future transactions, wouldn’t the institutions that take over the market be really stupid? Transactions that are often as high as hundreds of millions must be clarified before taking over.

In summary, SOL is still a long-term target.

2. What is the biggest risk after the token is determined to be securitized?

Cryptocurrency is decentralized, but cryptocurrency exchanges and the development entities behind it are centralized.

Therefore, most of any cryptocurrency, except for those whose founders have withdrawn like BTC and DOGE, are subject to regulatory constraints. This is a helpless reality.

Last year, due to the Middle East crisis, privacy tokens were involved in the money laundering storm of "terrorist organizations", which led to the removal of multiple privacy tokens by EUR, Italy and Binance.

From this perspective, the Americans have a certain say in crypto exchanges.

Once a token is listed as a security, it must comply with the U.S. securities law, and its cryptocurrency attributes and advantages will disappear, and it will no longer be suitable for trading on the exchange.

In summary, if a token is listed as a security, the biggest risk it may face is delisting from a top exchange.

3. Which tokens may be listed as securities?

POS, equity mining, dividend attributes, and selling tokens directly to retail investors in the primary market may be classified as securities. You can look at the current projects, which generally dare not sell in this way. They are all disguised pledges of coins, and the essence is still the same.

This issue has been analyzed last year. Let's see what was said at that time. (Figure 2)

Last year, the SEC announced nearly 100 suspected security tokens, which can be searched online. Below is a part of them. (Figure 3)

Of course, it does not mean that security tokens will not rise. There are also some that perform well, but most of them have performed poorly in this bull market.

When the risks are not mentioned, or the legislation is uncertain, and the attributes are uncertain, these projects have the opportunity to rise, but compared with non-security tokens, the risks are relatively large.

Among the above projects, 80% have performed poorly in the past, and the rebound this time is the smallest.

Remember that if you want to pick gold in the manure, the biggest risk to consider is not whether you can pick it, but whether you will be disgusted.

I have bought several of the above security tokens before, and I still hold them now. For example, SOL, BNB, TON, CHZ, LUNC, FLOW, SAND, ALGO.

When editing this article today, I have cleared all projects except SOL, although some will definitely sell out, and some are even below the cost line. But this is my choice. A gentleman does not build a dangerous wall. The principal is the most important.

It is not too late to buy after the news is confirmed. #5月市场关键事件