eToro, a social investing platform, announced on Monday that it will delist a selection of crypto tokens for its U.S. customers in response to recent legal action by the U.S. Securities and Exchange Commission (SEC). From July 12, U.S. customers will no longer be able to open new positions in the tokens of Algorand (ALGO), Decentraland (MANA), Dash (DASH) and Polygon (MATIC). However, customers will still be able to hold and sell existing positions in these tokens.
The crypto platform cited ‘recent developments’ as the reason for the move, referring to the SEC’s legal action against crypto exchanges Coinbase and Binance, in which the regulator claimed certain cryptocurrencies were securities, said eToro.
Following the SEC lawsuit against Binance.US, liquidity, measured by aggregated market depth for 17 tokens on Binance.US, has dropped 76%. The day before the June 5 lawsuit, market depth was at $34 million, whereas on Monday, it had plunged to $7 million. The exchange also saw its U.S. market share drop to 4.8% from 20% in April.
Members of the U.K. digital asset space seem to largely support a proposal by the country’s financial watchdog to move companies away from promoting crypto as an inflation hedge. The FCA’s tough rules to govern crypto promotional material in the U.K. include a ban on free non-fungible tokens (NFT) giveaways and airdrops. In guidance accompanying the rules, the regulator issued guidance for stablecoin issuers, saying firms should be able to demonstrate claims of stability or links to a fiat currency.
eToro’s decision to delist crypto tokens for its U.S. customers in response to the SEC’s legal action is indicative of the regulator’s increasing scrutiny of the crypto space. The SEC’s lawsuit against Binance.US has caused a significant drop in liquidity and market share, while the FCA’s proposal to move companies away from promoting crypto as an inflation hedge has been largely supported by the U.K. digital asset space.