Christopher Robbins/FA-Mag.com - Bitcoin has shriveled in the heat of regulatory scrutiny.
The value of bitcoin dropped by 18 percent over a matter of days after the U.S. Securities and Exchange Commission signaled that cryptocurrencies and the exchanges trading them are subject to existing securities laws.
Cryptocurrency exchanges and the digital “wallets” used to store assets like bitcoins and Ethereum currency should register with the SEC, the agency announced on Tuesday in its “Statement on Potentially Unlawful Online Platforms for Trading Digital Assets.”
The SEC’s statement went on to warn consumers against trading on unregistered trading platforms.
“The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not. Many platforms refer to themselves as ‘exchanges,’ which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange. Although some of these platforms claim to use strict standards to pick only high-quality digital assets to trade, the SEC does not review these standards or the digital assets that the platforms select, and the so-called standards should not be equated to the listing standards of national securities exchanges.”
After opening at a value of over $10,880 on Tuesday, bitcoin had declined to less than $9,400 by Thursday afternoon, losing much of its value after the SEC’s announcement. Ethereum, one of bitcoin’s largest rivals, slid from nearly $830 at the market’s open on Monday to under $720 Thursday afternoon.
At issue is whether bitcoin and other cryptocurrencies should be defined as securities, which would bring them under the auspices of the SEC. If cryptocurrencies are securities, then exchanges must register with the SEC. Similar laws would apply to companies that store cryptocurrency assets, often referred to as wallets.
Earlier this month, Bank of England Governor Mark Carney indicated that his agency would regulate cryptocurrencies in an attempt to prevent money laundering and terrorism. Meanwhile, Japanese regulators cracked down on seven different cryptocurrency exchanges, serving two with one-month suspensions and ordering five more to improve their business practices.
Source: FA-mag.com