Ethereum News Update
Ethereum prices, and cryptocurrency values more broadly, slipped again on Thursday as investors mulled regulatory actions in the United States and Japan.
This is surprising, given that U.S. regulators have largely welcomed cryptocurrencies with open arms. They tend to harbor a deep respect for innovation. Even if they worry about the dangers of initial coin offerings (ICOs), those concerns haven’t led to a broad crackdown.
For example, a recent Blockchain Summit featured speakers from the U.S. Commerce Department and the Office of Personnel Management. Both of them spoke glowingly about the potential of blockchain technology, demonstrating the government’s openness to new technology.
At the same time, however, the U.S. Securities and Exchange Commission (SEC) warned that “potentially unlawful online platforms for trading digital assets” might come under closer supervision. (Source: “Statement on Potentially Unlawful Online Platforms for Trading Digital Assets,” U.S. Securities and Exchange Commission, March 7, 2018.)
What do we make of these contradictions?
On the one hand, the SEC is cleaning up the market by scaring off scam artists who prey on retail investors. This might bring a modicum of order into a marketplace currently defined by chaos.
But on the other hand, the mere threat of SEC action is spooking investors. The Ethereum to USD exchange rate fell 5.65% since yesterday.
Moving on to Japan, the Financial Services Agency (FSA) suspended two cryptocurrency exchanges for one month.
This move was ostensibly a reaction to the $500.0-million NEM hack that took place at a Japanese exchange last month, but it also comes as part of a larger cleanup effort from the FSA. For example, seven other exchanges avoided suspension but were mandated to improve their security systems.
Japan was able to track the security measures of its constituent exchanges because it requires those exchanges to register with the FSA. The SEC is now moving in the same direction.
Here is a revealing excerpt from yesterday’s statement from the SEC:
“If a platform offers trading of digital assets that are securities and operates as an ‘exchange,’ as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration.”
In any case, these moves by the FSA and the SEC cannot be characterized as a crackdown. I think it’s fair to say that they reflect a tightening of crypto regulation, but these changes might actually improve the quality of the market.
As such, we maintain our $1,500 Ethereum price forecast for Q2.