New York - Bitcoin steadied after two days of losses as investors weighed the impact of a clampdown on cryptocurrency exchanges in
Japan and renewed regulatory scrutiny of the venues in the US.
The biggest virtual currency was flat at just under $10 000 as of
09:38, after earlier slumping more than 4% during
Asia trading hours. It has dropped about 10% this week.
Japan’s Financial Services Agency ordered two exchanges to halt
operations for a month and penalised four others on Thursday, just hours
after a warning from the US Securities and Exchange Commission that
many online trading platforms should register with the agency. The moves
are the latest in a series of efforts by global regulators to increase
oversight of the industry.
While signs of tighter regulation tend to weigh on digital-asset
prices, some observers have argued that more government involvement
would make the nascent markets safer for the hordes of individual
investors who piled during last year’s speculative boom. Several of
cryptocurrency venues have been hit by cyberthefts, trading outages and
allegations of market manipulation.
“The number of events, the frequency of events that have occurred in
the last short period of time has basically said to the regulators
‘Okay, we can’t just let this keep going, we have to act,”’ Ivan
Zasarsky, Hong Kong-based China Financial Crime Leader with Deloitte’s
APAC Financial Crime Network, said in a phone interview.
News on Wednesday that hackers had caused “irregular trades” at
Binance, one of the world’s biggest cryptocurrency exchanges,
highlighted the risks of using platforms that often operate in a legal
grey zone. While Binance said that no funds had been stolen, the
exchange also said it was unable to reverse some of the errant trades,
without clarifying further.
The clampdown in Japan, one of the few major countries to develop a
licensing system for cryptocurrency exchanges, came a month after
Tokyo-based Coincheck lost nearly $500m in the biggest
cyber theft of its kind.
Two exchanges - FSHO and bit station - were instructed to halt
operations for a month, the FSA said at a briefing in Tokyo, while GMO
Internet’s GMO Coin, Tech Bureau’s Zaif, Bicrements and Mr.
Exchange also face sanctions. The FSA ordered Coincheck to revise its
management structure, improve anti-money laundering procedures and
submit a report by March 22.
“They’re not going to allow anything to move without regulatory oversight in that market,” said
Stephen Innes, head of trading for Asia Pacific at Oanda. “The FSA are extremely sensitive to regulatory compliance.”
In the US, the SEC said for the first time that platforms serving
as venues for digital assets that are securities will need to register
with the agency as a national exchange, or qualify for an exemption.
Many platforms are referring 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, the SEC said
in its statement, which was issued by the agency’s trading and markets
unit and its enforcement division.
The enforcement division’s involvement shows the potential pitfalls
for digital-coin platforms that don’t heed the SEC’s warning to register
with the agency: they could be sued and shut down.
Exchanges that register with the agency have a high compliance
burden, including being subject to inspections. They are also required
to police their markets and follow SEC rules designed to ensure fair
Some of the largest cryptocurrency trading platforms, including
Coinbase’s GDAX, aren’t registered as a exchange with the SEC, and
instead have money transmission licenses with separate states. Gemini is
regulated by the New York State Department of Financial Services as a
trust company, according to its website, while Templum is an
affiliate to Liquid M Capital, which is registered as an alternative
trading system with the SEC.
Overstock.com’s tZero says it aims to
be a fully-compliant trading platform.
Coinbase said in a statement that it complies with all applicable
laws. “Under the current SEC guidance, Coinbase and the GDAX exchange
are exempt from registration requirements as they do not list assets
that could be considered securities,” it said. The company said it plans
to continue discussing regulation of cryptocurrencies with authorities.
“We applaud the SEC’s statement,” Gemini President Cameron Winklevoss
said in a statement. “The trading of ICO tokens that are unregistered
securities on unlicenced exchanges has gone on for far too long. This is
dangerous for consumers and bad for the cryptocurrency ecosystem as
Users of Binance complained online that their accounts had been
hacked, and took to social networks Reddit and Twitter to say that
hackers had sold their smaller coins and purchased a cryptocurrency
A QuickTake explainer on regulators’ crypto-crackdown
The exchange said in a statement on its website that it had been the
target of a “large scale phishing and stealing attempt.” While it said
“all funds are safe,” Binance noted that it was unable to reverse some
trades from accounts targeted by the hackers.
“We again advise all traders to take special precaution to secure their account credentials,” Binance said.
Zhao Changpeng, the exchange’s chief executive officer, didn’t immediately respond to a text message seeking comment.