Federal regulators widened their crackdown on crypto-assets on Wednesday by requiring the various platforms that trade Bitcoin and their digital cousins to register as exchanges.
News of the rule change from the Securities and Exchange Commission sent the price of Bitcoin, ethereum and other digi-assets down as much as 8 percent.
The SEC is going to require the platforms, like the Winklevoss twins’ Gemini exchange, to follow the same stringent rules as the New York Stock Exchange — or get an exemption to become “dark pools” that get less scrutiny but often much less traffic.
On the fear that tighter regulation could tamp down the level of trading, the price of Bitcoin fell 11 percent, to $9,481.45, before rebounding to $10,097, at 5:30 p.m.
The SEC’s new rules cast doubt on how safe crypto exchanges have been — even as some of the biggest companies tout their strict rules and tight security.
“We have the highest compliance standards, as [high as] any bank in the US, which I think is probably globally the highest standard in the world,” one exchange executive boasted to The Post.
Regulation for Bitcoin isn’t totally new.
Some exchanges, like Gemini, have been under regulatory scrutiny from New York’s Department of Financial Services since 2015.
“DFS’s rigorous process ensures only the most safe and compliant firms can do business with New York consumers,” Maria T. Vullo, DFS superintendent, said in a statement.
The new rules come less than a week after the SEC continued it probe of companies trying to raise money through their own cryptocurrencies, a process known as an initial coin offering.
“Just as corporations are investing significant resources in digital transformation, the SEC is bringing to bear notable resources in this emerging area,” Glen McGorty, a securities lawyer and former federal prosecutor, told The Post.