Cryptocurrencies were broadly higher on Thursday even as the US Securities and Exchange Commission (SEC) urged the need for more regulation in the industry and cracked down on a now defunct crypto trading platform.
SEC chairman Gary Gensler asked cryptocurrency trading platforms to cooperate with regulators, warning that failure to do so could end up hurting them.
“At about $2 trillion of value worldwide” the industry is “at the level and the nature that if it’s going to have any relevance five and 10 years from now, it’s going to be within a public policy framework,” he told the Financial Times.
“History just tells you, it doesn’t last long outside. Finance is about trust, ultimately.”
Nigel Green, CEO of financial advisory firms deVere Group said: “It must be championed that the man at the top is taking a future-focused and pragmatic approach to cryptocurrencies – which are becoming an increasingly dominant part of the mainstream global financial system."
Cryptos “must be brought into the regulatory tent and be held to the same rigorous standards as the rest of the financial system. The best way to do this is through the exchanges,” he said.
The watchdog needs more powers over the market, he added.
The SEC has sued the founder of cryptocurrency exchange platform BitConnect, which is now defunct, over his alleged role in fraudulently raising about $2bn from retail investors.
However, despite this, major cryptocurrencies were up on Thursday morning.
This could be because “with each passing day, more and more people and companies are showing interest in the blockchain space”, said Naeem Aslam, chief market analyst at Ava Trade.
“Big corporations have also become key players in the market and are working on ways to let their consumers get in on the action,” he said.
One example is Alpaca and Offchain Labs receiving $170m in funding to expand their crypto-related offerings
Meanwhile El Salvador has approved a $150m trust fund ahead of the country’s move to make bitcoin legal tender, which is set to take effect on 7 September.
Not everyone is happy about this though. Media reports show that protests around the move are growing amid fears that the government is moving too fast and that crypto’s volatility puts everyday investors at risk. There are also concerns about technological, financial and criminal challenges.
Watch: What are the risks of investing in cryptocurrency?