Crypto momentum hit by SEC regulation comments

SEC chair Gary Gensler calls on Congress to step up cryptocurrency exchange regulation

The new chair of the US Securities and Exchange Commission (SEC) Gary Gensler has given cryptocurrency markets reason to pause after he stressed to the United States’ Congress the need for more regulation of the industry.

Asked by Republican Patrick McHenry what the SEC would do ensure that the cryptocurrency sector was “vibrant with legitimate money and under the rule of law”,  Gensler said: “There’s a lot of authority that the SEC currently has in the securities space, and there are a number of cryptocurrencies that fall within that jurisdiction.

"But there are some areas, particularly Bitcoin trading on large exchanges, that the public is not currently really protected.”

Wrangle with Ripple

The SEC is currently engaged in protracted legal proceedings with Ripple, arguing that the XRP token should be classified as a security and that the company’s multi-billion-dollar token sales therefore amount to an illegal securities offering.

Having been generally seen as a crypto-friendly figure, Gensler’s comments at his official appearance before Congress took some crypto traders by surprise. Having risen by roughly 7% in the two days leading up to his comments, the world’s largest cryptocurrency bitcoin fell by as much as 3%. Its biggest rival ether dropped by as much as 4%.

Coinbase, the most prominent publicly-traded cryptocurrency exchange, closed Thursday down 5.9% at $256.76 on the prospect of intensified regulatory scrutiny. The company now stands 21% below the level at which it began trading in early April.

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