Bitcoin just tanked below $10,000 after SEC says crypto exchanges must register with agency

Bitcoin fell Wednesday, dropping below the key $10,000 level after the Securities and Exchange Commission said it will require digital asset exchanges to register with the agency.

The largest cryptocurrency dropped nearly 10 percent to $9,757 on Coinbase in a sudden move after the SEC statement stoked fears tightening regulation could restrict future trading.

According to the SEC statement:

“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.”

“The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not. Many platforms refer to themselves as “exchanges,” which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.”

The statement from the regulatory agency comes after weeks of subpoenas from the SEC in its attempt to establish better control over the many trading platforms and exchanges.

Whether securities laws apply to digital coins has remained a matter of much speculation, enabling firms to rely on self-disclosure and attorneys to try to distinguish themselves from common scams.

Bitcoin is down roughly 50 percent from all-time highs near $20,000 reached in December, falling sharply since then as ongoing fears of government regulation plague the cryptocurrency.

But news of a potential phishing problem on one of the largest cryptocurrency exchanges also weighed on the asset Wednesday.

In a statement on Twitter, CEO Changpeng “CZ” Zhao said that the site was still investigating potential irregularities in trading.

According to CoinMarketCap, Binance is one of the top three largest exchange in the world based on trading volume.

— CNBC’s Evelyn Cheng contributed to this report.

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