In a recent development, New York-based firm Bakkt, a digital asset custodian and one-stop crypto shop, has decided to delist major assets like Solana, Cardano, and Polygon. These cryptocurrencies, all ranked in the top 20 in terms of market capitalization, will no longer be available for trade on the platform due to regulatory uncertainty.
This decision comes on the heels of legal action taken by the U.S. Securities and Exchange Commission (SEC) against prominent cryptocurrency exchanges Coinbase and Binance for allegedly selling unregistered securities, which also included Solana, Cardano, and Polygon. SEC Chairman Gary Gensler has previously stated that most cryptocurrencies, except for Bitcoin, fall under the category of securities.
In light of this regulatory ambiguity, popular trading app Robinhood also opted to end its support for these three cryptocurrencies last week.
While Bakkt has not responded directly to requests for comments, the company hinted at waiting for “further clarity on how to compliantly offer a more extensive list of coins,” as reported by Fortune.
Initially focused on providing Bitcoin custody services to institutional investors, Bakkt was launched by Intercontinental Exchange (ICE), the same company behind the New York Stock Exchange (NYSE). With time, the platform expanded its offering with an app that allowed retail investors to trade cryptocurrencies. However, it shut down this service in March, attributing the closure to its non-alignment with its B2B2C approach.
The removal of these major cryptocurrencies from Bakkt’s trading platform highlights one of the concerns and challenges regulators face in dealing with the rapidly evolving digital assets ecosystem. Since regulations have a significant impact on the growth and development of the crypto market, such steps expose existing shortfalls in regulatory clarity and consistency.
On the one hand, strong, comprehensive regulations could foster a more secure, stable, and mature crypto market, encouraging institutional interest and mainstream adoption. Regulators would be able to monitor compliance and prosecute any illegal activities more effectively.
On the flip side, over-regulation can stifle innovation and limit investor access to new financial instruments and technologies. Market participants might also seek alternative avenues, leading to the formation of a parallel cryptocurrency ecosystem that remains unregulated.
Bakkt’s decision to delist Solana, Cardano, and Polygon underscores the need for clear and consistent regulations that cultivate a stable trading environment while not inhibiting innovation and growth. As the crypto industry continues to expand, it is essential for regulators to strike the right balance between investor protection, market development, and technological progress.
Source: Decrypt
