Bitcoin recently climbed back up above $27,000 after the Securities and Exchange Commission (SEC) announced a lawsuit against Binance, the world's largest crypto exchange by trading volume. The price slid near $25,400 but started edging upward by the end of the day and continued its path even as the SEC announced a second lawsuit against Binance rival Coinbase. This resurgence leads one to believe that the market had priced in the lawsuit, and investors are not surprised by Gensler's actions.

Ether also spent much of that Tuesday on the upswing, and other tokens regained slivers of ground lost amid lawsuit aftershocks.

Despite the regulatory environment, institutional investors remain ambivalent about entering the crypto space. Many funds that invested in FTX got burned, and some partners that led their firms' FTX deals were fired. As a result, many VCs are feeling nervous to enter crypto, and there is a similar trepidation among institutional allocators like pensions and endowments who broadly got burned on their earlier crypto allocations.

The recent regulatory crackdown could drive crypto firms out of the U.S. or lead to a more regulated industry. The SEC's increasingly aggressive campaign to bring cryptocurrencies under the jurisdiction of federal securities laws may transform the cryptocurrency industry.