Bitcoin Falls Sharply on Fears of Regulation
Investing.com – Bitcoin fell on Wednesday amid fears of increased regulatory pressure after the Commodity Futures Trading Commission said that virtual tokens used in initial coin offerings were classified as securities.
On the U.S.-based Bitfinex exchange, bitcoin fell to $5,373.2, down $224, or 4%.
The Commodity Futures Trading Commission (CFTC) – an independent US government agency that regulates futures and option markets – said that it supported the Security Exchange and Commission findings that virtual tokens used in Initial Coin Offerings are securities, fuelling investor fears over the possibility of regulatory action.
“There is no inconsistency between the SEC’s analysis and the CFTC’s determination that virtual currencies are commodities and that virtual tokens may be commodities or derivatives contracts depending on the particular facts and circumstances,” according to the CTFC’s primer on virtual currencies.
This is not the first time initial coin offerings have come under regulatory scrutiny. The People’s Bank of China (PBoC) sent shockwaves through the cryptocurrency market earlier this year after imposing a ban on individuals and businesses from raising funds through initial coin offerings.
Strong demand for bitcoin, however, lifted the popular digital currency off session lows as traders await the upcoming hard fork in Bitcoin. The hard fork, expected October 25, will create an offshoot cryptocurrency called Bitcoin Gold, which would be freely distributed to current holders of bitcoin.
The expected hard fork in Bitcoin comes amid concerns over mining monopolies present in the Bitcoin network. Proponents of Bitcoin Gold believe, however, that the ASIC resistant cryptocurrency will decentralize the Bitcoin network, lowering the possibility of minning monopolies.
In other cryptocurrency news, Bitcoin Cash fell 12% to $324.02, giving back its gains from the previous session which followed an uptick in demand from South Korea after trading volumes spiked on Bithumb, one of the largest exchanges in the country.
Bitcoin Cash’s market cap of $5.46bn pales in comparison to bitcoin’s $90.24.
Ethereum, the second largest cryptocurrencies by market cap, lost 3.89% to $303.7.
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