The global crypto market cap is back to the $1.01T mark, with most coins and tokens registering down-ticks over the last few days. Although the charts have made a small tilt to green today, the SEC-Paxos clash has evidently taken its toll. A wider downturn is on the horizon this month, with the regulatory grip from the United States Securities and Exchange Commission (SEC) set to tighten.
BTC is down to $21,815.46 with a 5.09% slump over the week and Ethereum to $1,508.30. Most cryptocurrencies have followed suit, with the rare exception of assets like Tether, Tron, Hedera, Mina, Maker, and BinaryX. Early-stage presales of trending projects like Fight Out (FGHT), Meta Masters Guild (MEMAG), and C+Charge (CCHG) have also been progressing undeterred over the week.
Why is the crypto market down?
The United States Securities and Exchange Commission (SEC) issued a Wells notice to Paxos just recently. Paxos is a blockchain infrastructure platform that issues the dollar-pegged Binance USD (BUSD). A Wells notice indicates that regulators have discovered infractions in the company’s operations. The SEC staff is considering recommending an action alleging that BUSD is a security and that Paxos should have registered the offering of BUSD under federal securities laws.
BUSD 7D price history, 14 Feb 2023, Source: CoinMarketCap
As per the latest news, the New York Department of Financial Services (NYDFS) has ordered Paxos to stop the issuance of BUSD. Binance USD, alleged to be an unregistered security, is likely to face more regulatory wrath. “DFS has ordered Paxos to cease minting Paxos-issued BUSD as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance in regard to Paxos-issued BUSD,” states the NYDFS website.
Paxos disagrees with the SEC, however, “because BUSD is not a security under the federal securities laws. This SEC Wells notice pertains only to BUSD. To be clear, there are unequivocally no other allegations against Paxos. Paxos has always prioritized the safety of its customers’ assets. BUSD issued by Paxos is always backed 1:1 with US dollar-denominated reserves, fully segregated and held in bankruptcy remote accounts”. The Paxos team assures that it will engage with the SEC staff on the issue and is prepared to vigorously litigate if necessary.
This is not the first time regulatory action has thrown crypto assets into uncertainty. Earlier this month, the SEC declared that crypto-staking services violate securities law. As a result, Kraken was forced to close its staking offering. Platforms like Coinbase have also locked horns with regulators, with the staking products on the radar.
So, are stablecoins securities?
Industry experts and lawyers have yet to reach a conclusion on whether stablecoins are securities. According to the traditional definition of the term, any investment of money in a business with the expectation of a profit from the efforts of someone other than the investor is a security.
“On a narrow view, the whole idea of the stablecoin is that it is stable. On a broader view, it could be argued that arbitrage, hedging and staking opportunities provide an expectation of profit,” says Aaron Lane, a senior lecturer at RMIT’s Blockchain Innovation Hub. If a stablecoin is found to be a derivative of a security, it might fall under U.S. securities laws.
In July 2021, SEC Chair Gary Gensler stressed the same: “Make no mistake: It doesn’t matter whether it’s a stock token, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities. These platforms — whether in the decentralized or centralized finance space — are implicated by the securities laws and must work within our securities regime.”
The fact that stablecoins are sometimes offered at discounted prices before stabilization also poses a challenge. In that case, investors may buy the token with the intent for resale on price rise or stabilization. At the end of the day, each stablecoin is different. Is it algorithmic, crypto-collateralized, or fiat-collateralized? All of these factors will go into the final label.
The security allegation against BUSD won’t stop there. Most high-cap stablecoins are likely to face litigation in the coming days. Stablecoins are one of the most promising niches of the market, with many real-world integrations lined up. It could slow down if the issuing companies continue to lock horns with the SEC.
What about cryptocurrencies in general?
The U.S. Supreme Court uses the Howey Test to determine whether a transaction qualifies as an investment contract and is therefore subject to the U.S. securities laws. According to the test, an investment contract exists if there is an investment of money (1) in a common enterprise (2) with the expectation of profit (3) to be derived from the efforts of others (4).
For years, digital currencies such as Bitcoin and Ethereum have been facing regulatory threats due to their decentralized foundation. But as in the case above, a digital asset qualifies as a security based on whether there is an expectation of profit to be derived from the efforts of others. It will come down to the utility of the asset in question. Each asset will have to fight its case based on the relevant utility it provides to holders. As a result, investing in utility-rich projects is the best way forward.
That said, crypto giants are to be steered clear of this season, as they are likely to take the brunt of the Paxos litigation.
Cryptos to ditch this month
The list is broad. Unless the project has remarkably interesting developments going on in the ecosystem or the community, it is to be set aside for a better time. Established cryptocurrencies like Bitcoin, Ethereum, BNB, XRP, Cardano, Dogecoin, Polygon, Solana, Polka Dot, Shiba Inu, and Litecoin are best left to settle down. That doesn’t necessarily mean you should sell these assets. Wait till they are back on their feet before pumping in your money. But if you want to take your chance, this is a robust time to buy the dips.
14 Feb 2023, Source: CoinMarketCap
Cryptos to hoard this month
If you’re looking for a long-term investment, market-relevant assets like Aptos, Optimism, and Dash 2 Trade will do. Although they are facing minor setbacks now due to broader market volatility, things will look up owing to the solid foundation of the projects. If you’re looking for assets that can give you quick bucks, consider investing in the hot ones. Tron, Hedera, Mina, Maker, BinaryX, and Oasis Network have been bucking the trend in the last two days. Although BinaryX is now on a decline, others still have room for growth.
But if you want to invest in assets with promising short-term and long-term projections, utility-rich presale tokens are the answer. Don’t jump into any presale token that pops up in your feed. Instead, dive deep into the project and find out how the asset adds value to the ecosystem. We will give you a head start with three presale tokens that are hot now.
Fight Out (FGHT) – The Future of Fitness
Move-to-earn project Fight Out recently crossed the $4M mark of its presale, after witnessing a huge investor rush. The project’s mass appeal lies beyond the crypto market, especially in the fitness communities. It is predicted to be one of the first projects to enter the $1B club this year, owing to the large growth potential of metaverse fitness.
Here is why. Traditional gyms are phasing out to give way to boutique fitness studios that offer better motivation, guidance, accountability, and engagement. While gyms have low retention rates, boutique fitness studios and personal trainers are not without shortcomings, as they are highly expensive. Fitness apps, on the other hand, are bound by the inherent limitations of Web 2. It has been proven time and again that dozens of notifications a day can’t consistently motivate you to get out of bed and work out.
Fight Out offers a flexible, convenient, and engaging alternative. It integrates creative gamification and crypto-incentivization mechanisms, powered by blockchain, to bring metaverse fitness to the masses. The flagship product of Fight Out is the Fight Out Companion App, which allows you to earn as you work out in the metaverse with your friends, family, or other community members from around the world. It hosts competitive leagues, tournaments, and interesting fight modes where you can win glory, titles, and prize pools. It is also one of the first crypto-metaverse projects to open gyms across different locations, beginning in Q4 after the presale ends. The Web3-integrated gyms will boost move-to-earn earnings opportunities and cultivate deeper community bonds.
Given that the Soulbound NFTs are non-transferrable and REPS is off-chain, the value of the project is pumped into FGHT tokens, which are selling for 0.02195 USDT per token at the presale now. That explains why investors are hoarding the token in bulk. The price will rise as the presale moves to the next stages. Early investors can also take advantage of a presale bonus of up to 50% based on their lock-in period.
The presale is scheduled to end on March 31st, followed by tier-1 CEX listings on April 5th. The initial listing price is 0.0333 USDT per piece.
Meta Masters Guild (MEMAG) – A Play-and-Earn Mobile Gaming Guild
Meta Masters Guild (MMG), as the name implies, is a gaming guild. The ecosystem is mobile-first to penetrate the modern gaming community that prefers to game on the go. It will build high-quality mobile games that allow members to sustainably earn rewards in exchange for their contributions to the ecosystem.
MMG is set apart in the crypto gaming market with its play-and-earn approach, as opposed to play-to-earn. It lays down fun as the primary principle that drives its game, not crypto incentivization. This works out to be a more sustainable approach in the long run, as communities are at the heart of a gaming project. These are the first three titles from MMG:
- Meta Kart Racers – a mobile-first PVP racing game where you must compete against other players in the Meta Kart Championship.
- Raid NFT – a turn-based fantasy fighting game where you should choose between several warrior classes.
- Meta Masters World – a metaverse where members can explore games and experiences, collect resources, and enter competitions.
The gaming guild will ensure the smooth flow of assets between investors and gamers using well-defined profit-sharing systems. MMG’s single-currency ecosystem is fueled by the Meta Masters Guild token (MEMAG). They can be used to buy in-game assets, mint NFTs, and get upgrades. The fast-paced presale, which has raised 4M+ raised from public investors already, is widely predicted to become the next big gaming crypto.
C+Charge (CCHG) – A P2P Payment Solution for EV Charging Stations
The EV (Electric Vehicles) market is growing. But the present electric charging station infrastructure is unequipped to cater to the growing number of electric vehicles on the road. The lack of a uniform standard for charging customers across different charging stations and unfair incentivization stand in the way of its mass adoption. For example, EV drivers and owners are ineligible for carbon credits now. They are only distributed to charging station owners and EV car manufacturers.
C+Charge tackles these challenges using a robust peer-to-peer (P2P) payment system for EV charging stations built on blockchain technology. Here, individual electronic wallets are distributed to users, which they can use to pay for EV charging with the C+Charge (CCHG) utility token.
It removes the hassles of EV charging & payment and expensive Point of Sale (PoS) equipment using an easy-to-access universal payments system. The app allows the transmission of reliable information about the status of each station. As a result, drivers can ascertain their availability easily. C+Charge helps EV drivers earn the Goodness Native Token (GNT) every time they charge, made possible by a partnership with Flowcarbon.
The supply of CCHG tokens is capped at 1 billion, out of which 40% is made available to the public early via the presale. If you’re wondering whether you need to own an EV to reap returns from the presale, that’s not the case. The high market relevance of the project and the robust build of the application give the token large growth potential as an investment.
The token crossed the $1M mark in its presale just recently. It is divided into eight stages and currently closing in on the third stage. Since each stage will undergo a small price hike, it is best to invest in the token early.
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