Cardano (ADA) has emerged as one of the worst performers over the past day, despite the rest of the market seeing some upside potential. This can be attributed to the U.S. Securities and Exchange Commission (SEC) security levies, a classification that has been lurking heavily over staking tokens for the past year.
Cardano Foundation rejects security claims
In the SEC lawsuits circulated this week against crypto exchanges such as Binance and Coinbase, the SEC has pointed to some cryptocurrencies as securities in an effort to clamp down on the exchanges for unregistered securities trading.
One of the cryptocurrencies mentioned is Cardano, a network that uses a proof-of-stake mechanism where users stake their own token, ADA, to secure the network and earn rewards for it. ADA was mentioned in a list of other tokens including MATIC, BUSD, BNB, FIL, SOL, SAND, ATOM, MANA, COTI, AXS and ALGO. And despite this already long list, the SEC seems to believe more tokens qualify as securities given the wording of “including but not limited to”.
In light of this recent classification by the SEC, the Cardano Foundation has stepped forward to challenge the regulator’s claims. In a tweet on its official page, the foundation expressed disagreement with this classification and said it looked forward to working with regulators.
“The Cardano Foundation disagrees with the recent classification of ADA as a security under US law. We look forward to continuing to work with regulators and policymakers to achieve legal clarity and certainty on these matters,” said the Foundation.
ADA price falls to $0.33 | Source: ADAUSD on TradingView.com
ADA continues to struggle
Despite the Cardano Foundation taking to Twitter to debunk the SEC’s claims that ADA is a security, the coin has not fared well in the marketplace. While the overall market is on a recovery trend and Bitcoin is moving back above $26,000, ADA has remained stagnant.
Of the top 10 largest cryptocurrencies by market capitalization, ADA is currently the worst performer of the bunch. While Bitcoin and Ethereum are currently seeing an increase of about 3%, Cardano’s token is losing 3.6%. The performance is even worse on the weekly chart with 9% losses in seven days.
The performance of ADA is not uncommon as such a rating has put selling pressure on the digital asset. Investors are understandably moving to dispose of some of their holdings for fear of further legal action from the SEC. However, there is no indication of what the regulator plans to do against the digital assets it has classified as securities.
At the time of writing, ADA is changing hands at a price of $0.3406, bringing its total market cap to $11.89 billion.
