Crypto Markets Tumble as BTC, ETH, DOGE, and SOL Experience Significant Losses: Here is Why

By Tsunami 03/9/23 11:31 PM

On March 9, 2023, the cryptocurrency market experienced a sharp decline as Bitcoin dropped to $20,400, a 6.14% decrease, Ethereum fell 5,55% to $1,464, Dogecoin (DOGE) lost 8%, and SOL was down by 7%. The drop came amidst reports of an all-out assault on cryptocurrency by the Biden Administration, which plans to impose a 30% tax on the energy used for Bitcoin mining.

The proposed tax is part of President Biden’s tax plan, which is aimed at curbing climate change and promoting clean energy. The tax would apply to any firm using resources for digital asset mining and would be subject to an excise tax equal to 30% of the costs of electricity used. This would effectively increase the cost of mining Bitcoin and other cryptocurrencies, making it less profitable for miners. The tax is set to be implemented in the taxable years after Dec. 31, 2023, and will be phased in over three years, reaching the maximum 30% by the third year.

Crypto miners would also be required to provide reports on the amount and type of electricity used, as well as the value of that electricity. The tax would apply to miners who acquire their electricity needs off-grid, who would be required to estimate the electricity costs generated by any electricity generating plant.

These measures came on the heels of the US government’s decision to send $217 million in confiscated Bitcoin to the crypto exchange Coinbase, where it could be sold on the open market. The move was seen as a way for the government to liquidate its holdings in Bitcoin and to increase its cash reserves.

New York Attorney General Files Lawsuit Against Kucoin and Declares Ethereum a Security

In addition, New York attorney general Letitia James and the Office of the Attorney General (OAG) filed a lawsuit against the Seychelles-based crypto exchange Kucoin, claiming that Ethereum, Terra, and Terrausd are securities. According to the lawsuit, these crypto assets are speculative and rely on the efforts of third-party developers to provide profit to their holders. Kucoin failed to register as a licensed broker in the state of New York, and the lawsuit argues that Ethereum is promoted as an investment that is contingent on the growth of the Ethereum network.

New York Attorney General Files Lawsuit Against KuCoin Platform For Trading Unregistered Securities, Including ETH

The lawsuit also alleges that the developers of Ethereum promoted it as an investment that was contingent on the growth of the Ethereum network. For instance, the Ethereum Foundation notes on its website that many Ethereum users ‘see it as an investment, similar to Bitcoin and other cryptocurrencies.’ The ICO documents included representations that Ethereum production would dramatically slow over time, resulting in Ethereum becoming increasingly scarce and, thus, more valuable. The lawsuit details that Ethereum, Terra, and Terrausd are securities and were sold without being registered as such in violation of New York’s Martin Act.

The crackdown on Kucoin and the classification of Ethereum and other cryptocurrencies as securities by the New York attorney general is a significant blow to the cryptocurrency market, which has been fighting to gain legitimacy in the eyes of regulators. The move could have significant implications for the crypto industry, as it may lead to increased regulatory scrutiny and potentially stifle innovation in the sector.

Overall, the cryptocurrency market is facing significant challenges as regulators around the world seek to impose tighter controls on the industry. While many in the crypto community view these measures as a threat to their freedom and privacy, others see them as a necessary step to ensure the long-term viability of the market. Only time will tell how the crypto industry will adapt to these new challenges and whether it will be able to continue its rapid growth in the years to come.

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