Bitcoin prices inched higher Thursday, to within striking distance of $40,000, even as cryptocurrency markets were rattled by the collapse of a complicated token system with links to billionaire investor Mark Cuban.
Titan, a token used on a so-called DeFi, or decentralized finance system run by a group called Iron Finance, lost billions in theoretical value overnight as its price plunged from $65 to just fractions of a penny. The collapse was linked to a stablecoin known as Iron, which is partially backed by USDC, another stablecoin redeemable on a dollar-for-dollar basis and trades on the Coinbase Global (COIN) platform.
Dallas Mavericks owner Cuban, a long-time proponent of cryptocurrency architecture, revealed on Twitter last night that he "got hit like everyone else" in the Titan collapse.
Bitcoin prices were marked 1.07% higher on the Thursday session at $39,229.30 each, while Coinbase shares edged 0.16% higher to indicate an opening bell price of $228.42 each.
The embarrassing Titan selloff -- just days after Iron Finance boasted of a 'total locked value' of more than $2 billion -- comes at a sensitive time for cryptocurrency enthusiasts, and bitcoin in particular, as it attempts to bridge itself into mainstream investment vehicles and attract broader interest.
Last night, the U.S. Securities and Exchange Commission extended its review of application by VanEck Associates for a bitcoin ETF that would be listed on CBOE Global Markets.
The SEC, at least at the moment, doesn't consider bitcoin itself to be a financial security that falls under its jurisdiction, while the Commodity Futures Trading Commission considers it a commodity. To further complicate matters, the Internal Revenue Service sees it as property, at least in terms of any potential tax liability attached to its capital gains.
A recent move by Congressional lawmakers to clarify this discrepancy -- the Eliminate Barriers to Innovation Act -- would create a small group of experts tasked with merging the CFTC and the SEC's frameworks on digital asset regulation and decide, once and for all, if it should be deemed a security or a commodity.
The legislation, however, has yet to pass the Senate and may not become law until later in the year, leaving the ultimate decision on bitcoin oversight on hold.