Japan FSA’s Demand Sparks Bitcoin Sell Off
Bitcoin resumed its downtrend yesterday after Japanese cryptocurrency exchanges stopped accepting new clients in response to a demand from the regulatory authorities to further improve the process followed to prevent illegal activities such as money laundering. Following the news of the regulatory order, Bitcoin fell from about $6,700 to $6,100. The price is only about a $100 above the low of $5,972 recorded in February.
The Japanese Financial Services Authority (FSA) sent notices to bitFlyer and five other cryptocurrency exchanges, asking them to tighten noose on account opening practices. On receipt of the notice, bitFlyer immediately suspended new account creation and ‘maximize’ it efforts to create a service that strictly adheres to the guidelines provided by the authorities. bitFlyer has stated that it is re-implementing the account confirmation process.
Brian Kelly, founder and CEO of cryptocurrency-focused investment firm BKCM, is of the opinion that FSA’s order will have a negative impact on the capital inflow into cryptocurrency exchanges. However, he is optimistic about the long-term effects of implementing a more stringent verification system as demanded by the regulatory authorities. Kelly believes that the move would further solidify Bitcoin’s case as an asset class.
Bitcoin started declining earlier this month after the US CFTC began its probe on cryptocurrency market manipulation. The downtrend stopped when the SEC issued a statement saying that Ethereum (ETH) cannot be considered as a security. Bitcoin managed to hold at $6,700 even after the news of Bithumb hacking incident broke out. Bitcoin, unexpectedly, received support from Goldman Sachs CEO Lloyd Blankfein who said Bitcoin is ‘not for me’ but it’s too ‘arrogant’ to say it won’t have a future.
As it usually happens, Bitcoin is dragging other altcoins downwards along with it. This includes even EOS (EOS), which had successfully launched its mainnet recently. EOS (EOS) was listed as the best public blockchain networks by China’s CCID (Qingdao) Blockchain Research Institute two days ago, pushing the mightly Ethereum (ETH) to the second place.