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Cryptocurrancies Meet Regulatory Agencies


While investors are focused on the tumultuous cryptomarket and while start-ups are elbowing in on initial coin offerings, regulatory agencies have begun looking over cryptocurrency trades with “a fine tooth comb.” Cryptocurrency was created to sidestep government regulations and interference, but it seems that as currencies like bitcoin, ethereum, litecoin and others gain investors from all walks of life, government agencies are interested in investigating and curbing fraud.

The United States Securities and Exchange Commission, as well as the Commodities Futures Trading Commission, came forward with a joint statement. The statement reads, in part, “When market participants engage in fraud under the guise of digital instruments… the SEC and CFTC will look beyond form … and prosecute violations.”

The digital instruments in questions range from “virtual currencies, coins, tokens and the like.” Michael Arrington, of Arrington XRP Capital, told Business Insider that the SEC has been in contact with him regarding an initial coin offering in which his firm was invested. His impression is that the SEC and CFTC are examining the cryptomarket and virtual currency landscape with “a fine tooth comb.”

Companies are preparing for questions from investigative agencies. Post-announcement bitcoin’s value dropped by just under $800. Though the virtual currency made slow grains throughout the remainder of the day, it is too early too predict if the market will continue to head downward.

In China, Korea and other countries on the continent of Asia, an increase in regulations caused market upheaval. The Indian government is notifying virtual currency traders of their tax obligations. France is introducing regulations designed to prevent tax evasion and as of this writing, the CTFC has filed fraud charges against two cryptocurrency traders. Fraudulent activities include Ponzi schemes and failure to provide services.

The rush to invest in cryptocurrency has given rise to questionable companies looking to exploit uninformed investors. The crackdown is coming, making the future of virtual currency unclear. One clear prediction is that blockchain, the technology behind cryptocurrency, is an innovation that will continue to be put to use in the financial sector and other industries that are invested in maintaining encrypted records. Asia-based companies are developing blockchain technologies with enthusiasm. If investors are looking for the next big thing, then investing in blockchain innovators might be wiser than investing in virtual currencies.