Cache | A regulatory push jolts cryptocurrencies; Bitcoin drops sub $20K
The fall in bitcoin’s value has been steady for the last few weeks. And this trend was acerbated by the U.S. SEC Chairman Gary Gensler’s remarks at the Practicing Law Institute
The fall in bitcoin’s value has been steady for the last few weeks. And this trend was acerbated by the U.S. SEC Chairman Gary Gensler’s remarks at the Practicing Law Institute
Bitcoin, the most popular cryptocurrency, has been losing steam for quite sometime now. Last week, crypto-linked stocks fell after U.S. inflation in August numbers came in higher than expected. Bitcoin dropped over 6% on September 13.
The crypto asset has touched a fresh low on Monday, falling as much as 5% to a three-month low of $18,387. The drop seems to be stemming from regulatory concerns on one side, and a gloomy macro-economic backdrop on the other, which is keeping investors away from risky bets like cryptocurrencies.
“Looking at the landscape right now, both fundamentally and technically, it’s not looking great. There’s no immediate bullish catalyst that we can see that’s going to prop up these markets and bring in a whole lot of new money and liquidity,” Matthew Dibb, COO of Singapore-based crypto platform Stack Funds told Reuters.
The fall in bitcoin’s value has been steady for the last few weeks. And this trend was acerbated by the U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler’s remarks at the Practicing Law Institute (PLI). In a prepared speech dated September 8, Gensler noted, “Nothing about the crypto markets is incompatible with the securities laws. Investor protection is just as relevant, regardless of underlying technologies.”
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With that he called on crypto platforms to register each function they perform with the regulator. That meant crypto dealers, brokers, and lenders disclose functions they perform in the market with the SEC.
“I’ve asked the SEC staff to work directly with entrepreneurs [people running crypto projects] to get their tokens [projects] registered and regulated, where appropriate, as securities,” Gensler noted.
This has jolted the crypto market, where there are currently several platforms that perform all of these functions. This is in stark contrast to traditional securities markets, where such services are separated from each other, according to a blog post by National Law Review.
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Ether, the second largest cryptocurrency, dropped 3% to a two-month low of $1,285 and is down more than 10% in the last 24 hours. Ether could test $950 in the coming days, Dibb told the news agency.
Most other cryptocurrencies are deep in red. The fall in the crypto market comes after the much-awaited Ethereum Merge culminated on Friday, cementing a new verification mechanism for cryptocurrencies on the block.
Ether’s value is said to have fallen amid speculation that remarks from Gensler suggested a new consensus mechanism could attract extra regulation. Trades around the upgrade also were unwound.
(This article is part of Today’s Cache, The Hindu’s newsletter on emerging themes at the intersection of technology, innovation and policy. To get Today’s Cache in your inbox, subscribe here.)
