SINGAPORE/WASHINGTON, July 14 (Reuters) - Bitcoin was hovering near its highest level this year on Friday after crypto investors were buoyed by a legal victory in which the cryptocurrency XRP was ruled not to be a security. .
A US judge ruled on Thursday that Ripple Labs Inc did not violate securities law by selling its XRP token on public exchanges.
The case marks the first victory for a cryptocurrency company in a lawsuit brought by the United States Securities and Exchange Commission. Although the decision was specific to the individual case, it sparked a wave of optimism among crypto investors that more cryptocurrencies might also not qualify as securities.
Still, some enthusiasm was tempered by a Wall Street Journal report that Binance, the world's largest cryptocurrency exchange, has laid off more than 1,000 people in recent weeks. The layoffs are ongoing and could result in the stock exchange losing more than a third of its staff, the report said, citing a person familiar with the matter.
Coinbase also announced on Friday that it would limit its crypto staking services for retail customers in California, New Jersey, South Carolina and Wisconsin, pending multiple state lawsuits against the exchange. last month, claiming the program violated securities laws.
Bitcoin hit its highest price since June 2022 earlier, touching $31,818, before falling to trade around $30,091 at 2009 GMT on Friday.
The second-largest token ether had its best session since March on Thursday and XRP, which the US judge said could be legally sold on public crypto exchanges, soared 73% on Thursday and held most of those gains on Friday.
“The regulatory environment is changing,” said Matthew Dibb, chief investment officer at crypto asset manager Astronaut Capital. "And from what we've seen over the past 24 hours, that could be for the best."
Justin d'Anethan, head of business development in Asia at Keyrock, a digital asset market maker in Hong Kong, said the discovery that XRP tokens sold on public crypto exchanges were not securities under the law "probably served as a precedent".
“Ripple stakeholders have been waiting for some regulatory clarity. The court yesterday appears to have provided exactly that,” he said.
Following the ruling, several major cryptocurrency exchanges, including Coinbase (COIN.O) and Bitstamp, resumed trading XRP on their platforms, after suspending trading in the token in 2021 due to the SEC lawsuit. Binance.US said on Friday that it has also enabled XRP trading on its exchange.
Coinbase, which was sued by the SEC last month for alleged violations of securities laws, saw its shares soar nearly 25% on Thursday as investors hoped the ruling in the Ripple case would be good. bodes well for Coinbase.
SLOW RECOVERY
Cryptocurrencies have seen a gradual recovery so far this year, after prices fell sharply last year and a series of bankruptcies at major crypto firms, including crypto exchange FTX, left investors with heavy losses.
The collapse of FTX has given new impetus to global regulatory efforts to rein in the sector, especially to protect small investors attracted by quick returns.
China has virtually banned crypto. US investigators combing through FTX have charged founder Sam Bankman-Fried with multi-billion dollar fraud, to which he has pleaded not guilty.
Alex Mashinsky, the founder of bankrupt crypto lender Celsius, has been charged with fraud for misleading customers and artificially inflating the value of the company's token, according to a US indictment made public on Thursday. He pleaded not guilty.
Meanwhile, Coinbase and its biggest rival Binance are facing lawsuits, which they are contesting, from the SEC and, in Binance's case, other regulators as well.
A senior SEC official said last month that the industry has “a philosophy built on non-compliance.”
At Binance, the layoffs reported by The Wall Street Journal come as a series of executives have recently left the company, including Chief Strategy Officer Patrick Hillmann. Hillmann confirmed on Twitter that he was leaving the exchange, citing personal reasons.
Still, crypto investors have been encouraged by the world's largest asset manager, BlackRock (BLK.N), which last month filed for a bitcoin exchange-traded fund. Earlier in July, stock exchange operator Cboe (CBOE.Z) renewed its request for a similar fund to be managed by asset manager Fidelity.
As a risky asset, cryptocurrencies could also benefit from a weaker dollar.
"We had been through this long stretch of consistently negative news to make the space pretty dirty," said Chris Weston, head of research at brokerage Pepperstone in Melbourne.
"For the first time in a long time, the news is still positive and that means you have momentum."
Additional reporting by Vidya Ranganathan in Singapore; Editing by Simon Cameron-Moore, Alex Richardson and Josie Kao
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