More Regulatory Scrutiny Weighs on Bitcoin

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Increased regulatory scrutiny of bitcoin exchanges sent the price of the volatile digital currency plunging in recent days.

“The cryptocurrency has fallen about 18 percent to $9,245 since Tuesday morning, when it traded north of $11,000. The cryptocurrency suddenly dropped further in midday trading reaching a low of $9,086, according to CoinDesk,” reports CNBC.

Bitcoin futures debuted on the Cboe in December, followed by a launch on the CME. Nasdaq Inc. is still considering entering the bitcoin futures competition. Market observers previously expected Nasdaq to launch futures on the digital currency this year, perhaps as early as the second quarter. After bitcoin, the largest cryptocurrencies are Ethereum, Ripple, Bitcoin Cash and Litecoin.

“Bitcoin dropped below $10,000 Wednesday following news of compromised accounts on a major Hong Kong-based exchange and a statement from the U.S. Securities and Exchange Commission that expanded its scrutiny to cryptocurrency exchanges,” according to CNBC.

In a statement out Wednesday, the SEC warned against some of the digital platforms offering Initial Coin Offerings ("ICOs").

“The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not,” said the SEC in a statement. “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.”

Although bitcoin futures were viewed by many market observers as a potential segue to ETFs backed by the digital currency, U.S. regulators have yet to approve any such funds.

In fact, ETF issuers have been withdrawing plans for bitcoin funds. Direxion, ProShares and VanEck are among a handful of ETF issuers that have withdrawn filings to launch bitcoin ETFs at the request of U.S. regulators. The SEC requested the issuers withdraw their filings.

“Japan's Financial Services Agency suspended operations Thursday at two relatively small exchanges, Bit Station and FSHO, for one month. The regulator said a manager at Bit Station used customers' bitcoin for personal purposes, according to wires and a Google translation of an online statement,” according to CNBC.

For more information on the cryptocurrency, visit our Bitcoin category.

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