The major cryptocurrencies slid quickly on Wednesday, with Bitcoin falling about 5% in about an hour, while Ethereum and Ripple were also hit. The losses were tied to a reports that Goldman Sachs is abandoning its plan to open a cryptocurrency trading desk.
As first reported by Business Insider, the bank is dropping its plan due to an ambiguous regulatory environment with too many steps required to be taken, many of which are outside of the banks control, before a regulated bank could trade cryptocurrencies.
Bitcoin prices surged in 2017, with the cryptocurrency setting a record high just short of $20,000 in December. Amid spiking interest in the cryptocurrencies, and plans for contracts to go live on exchanges, Goldman Sachs aiming to capitalize on the trend, announced a strategy to clear bitcoin futures for some clients, as reported by Reuters.
When questioned about the report that it is abandoning its plans, a Goldman Sachs spokesperson told FOX Business that , "We're sticking with the statement we've been using all year....“In response to client interest in various digital products, we are exploring how best to serve them in the space. At this point, we have not reached a conclusion on the scope of our digital asset offering.”
But 2018 has been a rocky year for the world cryptocurrency with bitcoin prices sliding from record levels, pressured in part by regulators’ increased scrutiny of initial coin offerings (ICOs) and cryptocurrency exchanges. Last year, The U.S. Securities Exchange commission warned that some coins issued in ICOs would be considered securities and as a result trading would have to follow federal securities laws.
In March, in an exclusive interview SEC Chairman Jay Clayman told FOX Business
that investors should “think long and hard” before jumping into an initial coin offering.
As previously reported by FOX Business, the broader crypto market shed more than $600 billion in value from February through mid-August.