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Bitcoin hits one-week low as SEC calls for more power over crypto

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·Senior City Correspondent, Yahoo Finance UK
·2 min read
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New US Securities and Exchange Commission chair Gary Gensler. Photo: Jacquelyn Martin/AP
New US Securities and Exchange Commission chair Gary Gensler. Photo: Jacquelyn Martin/AP

The price of bitcoin (BTC-USD) continued to slide on Wednesday as investors and traders fretted over the possibility of stricter cryptocurrency regulation.

Bitcoin was down 2% to $37,806 ($27,121) by 9am in London on Wednesday. The world's biggest cryptocurrency was trading at its lowest level in just over a week, extending a slump that began late on Sunday.

Price pressure comes as regulatory scrutiny on the sector continues to mount. New US Securities and Exchange Commission (SEC) chair Gary Gensler told Bloomberg in an interview published on Tuesday that consumer protection in crypto was one of his key priorities.

In a speech delivered later that day, Gensler went further and called for additional powers to regulate the sector.

"We need additional congressional authorities to prevent transactions, products and platforms from falling between regulatory cracks," he said "We also need more resources to protect investors in this growing and volatile sector.”

Read more: How changes at crypto exchanges Binance and FTX could impact the price of bitcoin

Mati Greenspan, the founder of Quantum Economics, said: "What I thought was unfortunate was the way Gensler seems to want to stick with former SEC Chairman Jay Clayton's way of doing things. 

"Rather than try and define new rules of the road, he seems quite content with the old Howey Test, which he praised."

The Howey Test refers to a decades old Supreme Court ruling on the definition of an investment contract. The Supreme Court ruled that a contract exists "when there is the investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others".

"In truth, those laws probably were pretty good for business in the 1940s, but it would probably be a lot better for today's businesses if crypto entrepreneurs had a better understanding of what's allowed and what's not," Greenspan said.

Read more: Could ethereum overtake bitcoin?

The broader crypto ecosystem was under marginal pressure on Wednesday morning. The value of all cryptocurrencies in circulation was down 1.1% over the last 24 hours, according to data provider CoinMarketCap.com. Ethereum (ETH-USD), the world's second biggest cryptocurrency, was down 0.4% to $2,479.

Watch: What are the risks of investing in cryptocurrency?

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