Bitcoin plunged back below $7,000 on reports Goldman Sachs (GS) has abandoned plans to establish a cryptocurrency trading desk, sending cryptocurrency stocks lower Wednesday
The Wall Street bank sees the regulatory environment for digital currencies as ambiguous, according to Business Insider.
A Goldman spokesman refused to confirm the claims, and said the firm is still looking into the space.
“In response to client interest in various digital products, we are exploring how best to serve them in the space,” the bank said in a statement. “At this point, we have not reached a conclusion on the scope of our digital asset offering.”
Bitcoin fell 6% to $6,917.13, according to Coindesk. It is the first time it has fallen below the $7,000 mark in September, after clambering above the mark at the end of last month. Among other digital currencies, Ethereum sank 14%, Bitcoin Cash plunged 13.8% and Ripple, also known as XRP, lost 11.5%.
Among cryptocurrency stocks, Riot Blockchain (RIOT) closed down 7.75% on the stock market today, Overstock.com (OSTK) lost 10%, Marathon Patent Group (MARA) sold off 9%, and Bitcoin Investment Trust (GBTC) dropped 6.8%.
More Bad News For Bitcoin, Cryptocurrency Stocks
The news comes just weeks after the Securities and Exchange Commission rejected requests to list nine cryptocurrency exchange-traded fund funds.
The regulatory body cited continuing concerns about manipulation and market surveillance.
The ruling, which struck a blow on the many virtual-currency supporters who have lobbied for an ETF, was no great surprise however.
The SEC has repeatedly urged exchanges and wannabe issuers to address the risks that ordinary investors face from the manipulation of an unregulated market.
This was a key concern in January — when the agency outlined five questions it wanted answered — and why it again denied a Bitcoin fund run by the Winklevoss twins last month.
Bitcoin Attracts Wall Street
Goldman Sachs and JPMorgan Chase (JPM) are among the industry giants who have looked into the idea of trading cryptocurrency.
Meanwhile, CME Group (CME) and Cboe Global Markets (CBOE) have traded Bitcoin futures since late 2017. But others in the financial industry have taken a cautious stance due to regulatory uncertainty and volatile prices.
This has allowed the Coinbase exchange, which is backed by venture capital, traditional banks and exchanges, to build what Sanford Bernstein analysts have called an “unassailable competitive position.”
Analysts have said Wall Street has to act soon to prevent this but concede this is unlikely due to concerns over regulations and money laundering.
San Francisco-based Coinbase has around 50% of the transaction revenue pool. One stock exploring an invasion of the space is Riot Blockchain. It acquired Logical Brokerage in March, which it wants to use as a vehicle to launch a digital currency exchange and a futures brokerage operation.
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