Be Careful with the Cryptocurrency You Invest in

Cryptocurrency has turned a lot of heads in recent years. Despite its original intent to be the future of currency, it has become a promising source of investment for many out there. Cryptocurrency investors are ranging from business professionals to amateurs – thanks to its accessibility. It has become a prospective alternative to other commodities such as stocks, bonds and so forth. What’s more, is that these cryptocurrencies have successfully attained over billions of dollars from investors in these few years. As a result, it has captured worldwide attention from major organizations and media.

Updates about cryptocurrency have surfaced as a consequence of the steep decline and frequent fluctuations in its value. Several media organizations including CNBC have informed the public about the action taken by the SEC towards some of the major firms in the cryptocurrency industry. Since then, SEC have reached out to educate investors about these firms.

SEC have come up with several guidelines for investors to take into consideration. They are urging investors to do some research prior to the transaction. Investors should ask for clarification regarding their criterions in the process of choosing the quality assets. In addition, they should find out the status of the market under the National Securities Exchange. More facts and figures should be acquired from the Financial Industry Regulatory Authority concerning the people behind the market if possible.

“Amid signals that the SEC would check online platforms for violations of registration or exchange rules… some of the markets have requested or received approvals as alternative trading systems,” proclaimed Nick Morgan, one of the partners at Paul Hastings LLP. Morgan was previously part of the SEC senior trial counsel.

“Likewise, the SEC does not review the trading protocols used by these platforms, which determine how orders interact and execute, and access to a platform’s trading services may not be the same for all user,” as disclosed in a statement by the SEC Enforcement and Trading and Markets divisions.

SEC have stepped out to remind investors about the truth behind these platforms. The digital commodities offered by these servers are not endorsed by the SEC, and the list of criterions they follow are not associated to SEC.

“The so-called standards shouldn’t be equated to the listing standards of national securities exchanges,” the regulator reminds investors.

SEC continues to clarify and distance themselves from these servers.

The values of cryptocurrencies have suffered a decline in value, once again, on Wednesday.  Bitcoin value decreased to 7.1%, an improvement from the initial 9%, to $10,030 with Ethereum and Litecoin following behind, as announced by CoinMarketCap. This happened following a warning by the Securities and Exchange Commission concerning potentially unlawful trading websites that does not have regulatory oversight. The chief federal regulator of the United States financial markets has informed the public of the fact that these trading websites are not SEC-registered and regulated.

Bitcoin remains to be the most noteworthy cryptocurrency at this moment.

Cryptocurrency is a highly demanded choice of investment because of its convenience and availability. It allows beginners and youths to invest without feeling restricted by the amount. However, it also belongs to the “high risk high reward” classification. With this new piece of information from SEC, nonetheless, the risk that it entails have become more apparent and severe. Public confidence in cryptocurrency is already quickly slipping away with its severe decline. Will this statement from SEC further affect the demand for cryptocurrency?

There is no such thing as a meaningful Bitcoin price prediction. It just isn’t possible with the current structure. Bitcoin was never really intended to be a store of value. You have separate classes of investors, each with different goals for what Bitcoin should be. Miners and holders want it high, and the currency crowd wants it low. Those forces will pull at each other in unpredictable ways. Besides, the major exchanges and trading platform are all amateur hour, and most have perverse incentives to front run, which can tilt prices even more dramatically. Market manipulation is rampant and structurally impossible to solve short of mass action or outside regulation.

Featured Image via Flickr/Steve Garfield

Published by

Crystal Ng

The concept of time is lost on me as I venture into the world of business, politics, technology and all other matters concerning recent events. No matter where I am; out in the big cities or isolated in the desert, writing is seemingly the only constant variable in my life.

Leave a Reply

Your email address will not be published. Required fields are marked *