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Watchdog Agencies Keeping a Close Eye on Cryptocurrencies

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With the frenzy surrounding cryptocurrencies growing, two financial regulators from the U.S. have weighed in on the rising demand for Bitcoin. The chairman of the SEC (Securities and Exchange Commission) stated on Monday that the agency will be keeping a close watch on Bitcoin trading and crowdfunding attempts for initial coin offerings.

Additionally, the Head of the CFTC (Commodities Futures Trading Commission) stated the agency could not protect investors from the risk associated with trading volatile digital currencies. The two agencies are warning investors about the risks of digital assets after Bitcoin’s debut in the financial markets on Monday.

In what has been a whirlwind of buying and selling Bitcoin this year, investors saw the value of one Bitcoin reach as high as $19,000. The dramatic rise in the world’s most popular digital currency has many securities regulators worried. Many retail investors are leveraged to the hilt in digital currencies, and digital exchanges where investors can buy and sell digital assets are having trouble keeping up with demand.

Monday saw the introduction of Bitcoin futures on the CBOE Global Markets, and demand was so high that trading was stopped twice when the exchange’s circuit breakers were tripped.

J. Christopher Giancarlo, the head of the CFTC, said investors should keep a “close eye” on the high levels of volatility and risk associated with Bitcoin and other cryptocurrencies. He noted that the majority of platforms where investors can buy and sell digital assets are mostly unregulated. Therefore, the CFTC has little in the way statutory authority that would protect investors.

The SEC has been clamping down on initial-coin offerings, known as ICOs, where investors use crowdfunding techniques to fund the start of new cryptocurrencies. This year alone, there has been a total of $3.7 billion in revenue generated from crowdfunding using digital assets.

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