Bitcoin and other cryptocurrencies were down sharply on Friday, with the leading digital currency’s price plunging below $6,200 to its lowest level in months — close to taking out its February low of just below $6,000.
Japan is the most active market in the world when it comes to cryptocurrency trading, and troubling regulatory news out of the country is sending shockwaves through the markets. As of 11 a.m. EDT on Friday, all but one of the 50 largest cryptocurrencies were in the red.
Bitcoin symbol design on binary code background.
Image source: Getty Images.
Today’s cryptocurrency prices
As I mentioned, most major cryptocurrencies were getting crushed on Friday. Before we get into the news out of Japan, here’s a look at the 10 largest cryptocurrencies by market capitalization, all of which have fallen significantly over the past day.
Cryptocurrency Name (Code)
Price in U.S. Dollars
Day’s Change (Loss)
Bitcoin Cash (BCH)
Data Source: www.investing.com. Prices and daily changes as of June 22, 2018, at approximately noon EDT. Prices are rounded to the nearest cent where appropriate.
Japan’s latest regulatory action
Japan’s financial regulator, the Financial Services Agency, ordered leading cryptocurrency exchange bitFlyer and several other exchanges to take greater measures to prevent money laundering and terrorist funding.
Specifically, the regulator found several problems with bitFlyer’s accounts, such as one that was using a post office box as a mailing address. It also found that when the exchange registered with the government, it provided false information regarding its plans to prevent organized crime activity on its platform, among other issues.
As a result of the order, bitFlyer decided to suspend the creation of any new accounts while it makes improvements to comply. “In order to maximize out efforts toward building a suitable service and improving on the issues identified, we have temporarily suspended account creation for new customers of our own volition,” the company said in a statement.
The exchange will submit plans for improving its operations to the regulatory agency by July 23 — just over a month from now.
Many Americans don’t realize just how popular Bitcoin and other cryptocurrencies are in Japan. The country is by far the top Bitcoin market, with Bitcoin trading in Japanese yen making up over 60% of the leading cryptocurrency’s volume. So, it’s completely understandable that any disruption to the Japanese cryptocurrency market could scare investors.
Is this a good or bad development?
I’ve written several times that regulation will ultimately be a good thing for cryptocurrencies. Lack of regulation is one of the biggest obstacles to Bitcoin and other cryptocurrencies becoming mainstream assets, and regulating exchanges properly is a big part of that.
Japan has certainly been a leader on the regulatory front, with the first national system of cryptocurrency regulation and several proactive moves to ensure that exchanges are operating in investors’ best interests.
Having said that, shutting down access to the cryptocurrency markets to new investors could make people who are yet to get into the market even more hesitant to jump in. So, while regulations — and the initiatives against money laundering in particular — will be a good thing in the long run, this action could have a deeper effect than some of the other regulatory issues we’ve seen around the world in 2018.
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Matt Frankel has no position in any cryptocurrencies mentioned. The Motley Fool has no position in any cryptocurrencies mentioned. The Motley Fool has a disclosure policy.