Following the footsteps of Revolut, BitStamp, the world’s longest-running cryptocurrency exchange, announced it will cease trading of several altcoins, including ADA, SOL, and NEAR, for its US customers due to the stringent regulatory environment. This decision highlights the growing impact of regulatory actions on cryptocurrency exchanges, with the US Securities and Exchange Commission (SEC) at the center of the controversy for its undefined stance on altcoins being considered securities.
Mass Altcoin Banishment
“At Bitstamp, we have a comprehensive framework in place to continuously evaluate the cryptocurrencies we provide, taking into account the dynamic regulatory environment. Considering recent developments, we are making some changes to our crypto offerings — specifically for our customers residing in the United States,” read the company’s announcement on Tuesday, August 8. Starting from August 29, 2023, BitStamp will suspend trading for cryptocurrencies such as AXS, CHZ, MANA, MATIC, NEAR, SAND, and SOL in the US, signaling a significant shift in the platform’s offerings to comply with regulatory expectations.
Why Are Exchanges Removing Altcoins?
The SEC’s refusal to clarify the status of cryptocurrencies other than Bitcoin, Bitcoin Cash, Litecoin, and Ethereum as non-securities has led to a cautious approach among exchanges. The fear of lawsuits similar to those filed against Coinbase and Binance has prompted preemptive action from platforms like BitStamp. However, Ripple’s recent court victory over the SEC, declaring XRP not a security, has injected optimism into the crypto market, despite the SEC’s decision to appeal against the ruling.
Ripple’s Legal Victory and Its Implications
The legal battle between Ripple and the SEC has been closely watched by the crypto community, offering a glimmer of hope that not all cryptocurrencies will be deemed securities. Ripple’s win suggests a potential shift in how altcoins could be viewed legally, though the SEC’s appeal indicates the regulatory saga is far from over. This tension underscores the uncertain regulatory landscape that exchanges operating in the US must navigate.
BitStamp’s decision to halt trading of select altcoins in the US is a direct response to the SEC’s aggressive posture on cryptocurrency regulation. While the move may protect the exchange from potential legal challenges, it also restricts US investors’ access to a broader range of cryptocurrencies, reflecting the broader clash between innovation and regulation in the crypto space. As the industry awaits the outcomes of ongoing legal battles and regulatory clarifications, exchanges and investors alike must adapt to an ever-evolving environment.
