Every asset is priced according to its fundamental value and expectations of future performance. These two factors are influenced by two dimensions of risk - idiosyncratic (i.e., pertaining to the specific asset in question) and macro (i.e., a more economy-wide phenomenon). Macro risk, such as the threat of over-regulation and/or declines in consumer demand, tends to get the most attention, but it is actually less threatening in some ways.

Right now, many eyes are on the U.S. Securities and Exchange Commission (SEC) and how they are going to deal with Ripple, among other companies pioneering digital assets or providing a means of exchange (e.g., Kraken). That macro risk creates a ripple effect throughout the economy, particularly in the market for digital assets. For example, if XRP gets labeled as a security, then other tokens could be subject to substantial regulatory action as securities too, suffering fines and having to incur new compliance costs.

While that macro risk is important, it is easy to focus on it over the idiosyncratic factors that matter more for a given token. Regulatory clarity will become - we just do not know when - and there will be some degree of convergence across countries because of the mobile nature of capital. If one country over-regulates digital assets, then capital will migrate out and that will cause a re-evaluation. But if a digital asset fails for idiosyncratic reasons (e.g., terrible management or failure to solve a consumer demand), then that is a nail in its coffin for good.

The temptation is to focus on the highly salient macro risk, but a good rule of thumb is to pay close attention to the idiosyncratic factors - that's what really distinguishes one project from another - regardless of the type of asset.

In the mean time, let's see how regulatory bodies continue to form judgments and how companies react!