Growing Whispers of Federal Regulation Send Cryptocurrencies Down

May 1, 2018, 3:18 PM UTC

Regulators are giving increasing thought to treating cryptocurrencies as securities, according to a new report in the Wall Street Journal.

And fears that the same rules that apply to stocks will impact Bitcoin, Ripple, Ethereum, and other cryptos sent prices down in mid-morning trading Tuesday. Major cryptocurencies were off anywhere from 4% to 9% as of 11 a.m., according to CoinMarketCap.

Ethereum is down 5.4% as the Journal story suggests that some regulators believe the crypto’s 2014 creation was “probably an illegal securities sale.”

While the Securities and Exchange Commission has hinted it sees cryptocurrencies as securities, the Commodity Futures Trading Commission calls them commodities, which makes them exempt from SEC regulation. A joint discussion on the status is expected to occur next week.

Investigators are reportedly looking at whether the creators of digital currency can control the value of the coins. If so, that could increase the chances of regulation, as it would put the currency on par with companies whose stock performance is affected by decisions from company management.

The price drop among cryptocurrencies comes after they posted big gains in April, as investor confidence in Bitcoin, Ethereum, and more began to solidify once more.

Not everyone is bullish on the digital coins, though. In February, Ethereum founder Vitalik Buterin warned that cryptocurrencies could drop to ‘near-zero’.

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