Cryp­tocur­ren­cies fluc­tu­ate as reg­u­la­tory spot­light in­creases

The Pak Banker - - FRONT PAGE - HONG KONG -AFP

Cryp­tocur­ren­cies con­tin­ued to whip­saw in­vestors, send­ing Bit­coin to its low­est level since Oc­to­ber be­fore re­cov­er­ing, as wor­ries over tighter reg­u­la­tion by US au­thor­i­ties and cen­tral bankers else­where gave traders fresh rea­sons to exit af­ter a bru­tal start to 2018.

The sell­off has now knocked about half a tril­lion dol­lars from dig­i­tal coins since early Jan­uary. That's shaken a nascent mar­ket whose core at­trac­tion-anonymity and de­cen­tral­iza­tion-is be­ing chal­lenged as never be­fore by reg­u­la­tors.

Prices stead­ied as Se­cu­ri­ties and Ex­change Com­mis­sion chair­man Jay Clay­ton re­it­er­ated in a Con­gres­sional hear­ing that he be­lieves ev­ery ini­tial coin of­fer­ing he's seen is a se­cu­ri­ties sale and the agency al­ready pos­sesses the reg­u­la­tory over­sight needed for en­force­ment.

"I don't see any­thing they said so far crash­ing the mar­ket," said Jesse Over­all, an at­tor­ney at Clif­ford Chance, in an e-mail. "If any­thing, their ac­knowl­edg­ment that there's a reg­u­la­tory gray area ( as op­posed to be­ing out­right il­le­gal un­der present law) with re­spect to cryp­tocur­ren­cies is a sort of re­prieve that could be ben­e­fi­cial to the mar­ket."

Tues­day's US hear­ings fol­low com­ments from Bank for In­ter­na­tional Set­tle­ments gen­eral man­ager Agustin Carstens that there's a "strong case" for au­thor­i­ties to rein in dig­i­tal cur­ren­cies and that cen­tral banks-along with fi­nance min­istries, tax of­fices and fi­nan­cial mar­ket reg­u­la­tors-should po­lice the "dig­i­tal fron­tier".

"Novel tech­nol­ogy is not the same as bet­ter tech­nol­ogy or bet­ter eco­nomics," Carstens said in a speech in Frank­furt. He said Bit­coin may have been in­tended as an al­ter­na­tive pay­ment sys­tem with no gov­ern­ment in­volve­ment, yet it has be­come "a com­bi­na­tion of a bub­ble, a Ponzi scheme and an en­vi­ron­men­tal dis­as­ter", in ref­er­ence to its elec­tric­ity use.

The big­gest vir­tual cur­rency sank as much as 17% to as low as $5,922, be­fore trad­ing lit­tle changed at $7,131 as of 11.26am in New York, ac­cord­ing to Bloomberg com­pos­ite pric­ing. Al­ter­na­tive coins Rip­ple, Ether and Lite­coin also fell at least 3.5% be­fore re­cov­er­ing.

"Crypto is be­ing driven by daily neg­a­tive news," said Craig Er­lam, a se­nior mar­ket an­a­lyst in Lon­don at on­line trad­ing firm Oanda Corp. "There's reg­u­la­tion spec­u­la­tion in In­dia, South Korea, and the US. And then there's hack­ing, the Face­book sit­u­a­tion and fi­nally the Tether story has peo­ple wor­ried as well."

Cryp­tocur­ren­cies tracked by Coin­mar­ket­ have lost more than $500 bil­lion of mar­ket value since early Jan­uary as gov­ern­ments clamped down, credit-card is­suers halted pur­chases and in­vestors grew in­creas­ingly con­cerned that last year's me­te­oric rise in dig­i­tal as­sets was un­jus­ti­fied.

This week's sell­off has co­in­cided with a rout in global eq­ui­ties, with mar­kets in Asia ex­tend­ing losses fol­low­ing a white-knuckle day for US stocks. Some tech­ni­cal in­di­ca­tors sug­gest the rout in Bit­coin has fur­ther to go.

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