SEC probes Cryptocurrency Market

by: The Knowledge Group

March 05, 2018


Not but a few months after cryptocurrencies underwent a historic boom that saw their prices climb almost 2000% in the course of a year, we are now entering tough times for the cryptocurrency market. As of this writing, the price of Bitcoin has dropped to right at $11,000 – almost $9,000 off of its December 2017 high. While Bitcoin is up from its February 5 closing low of $6,914, the SEC’s latest probe could indicate that even more troubles are ahead for the cryptocurrency market.

The Wall Street Journal reported on February 28 that the SEC has issued “scores of subpoenas” to acquire information from those who are in charge of the various digital currencies. Right now, cryptocurrencies are not heavily regulated, even in comparison to traditional securities such as stocks and bonds. This lack of regulation has helped the cryptocurrency market to flourish, however, investors have long feared that it would eventually come to an end. If, after their probe, the SEC decides to crack down on the technology companies and advisors tied to Bitcoin and other cryptocurrencies, it could send the price of these digital currencies into a tailspin in a matter of days.

There is some promise to cryptocurrencies, particularly the blockchain technology that is behind them. However, the chance that regulatory bodies such as the SEC will eventually come down hard on the cryptocurrency market looms over these digital currencies like a storm cloud. As we have already seen numerous times before, the price of cryptocurrencies is outrageously volatile, and, so far, there has been no factor behind their price swings that would come close to comparing to the impact that a major increase in regulation would have.  Unless you have an incredibly high tolerance for risk and want to take the gamble that digital currencies will spike up again sometime before they are likely squashed by the SEC, cryptocurrencies as an investment are best avoided.

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