Bitcoin has had a good year despite numerous global challenges, becoming more popular than ever. But in doing so, it will now face more scrutiny from regulators, Bloomberg reported.
Guy Hirsch, managing director for the U.S. at online trading platform eToro, said in the report there are "storm clouds" on the horizon for the form of currency.
According to some proponents of bitcoin, the pandemic environment provided a perfect springboard from which a surge in cryptocurrency use could arise, Bloomberg reported. Warnings of money-printing by global central banks, some of which began to show their own interest in digital currency, gave way to fears of inflation. This came as interest rates hit historic lows, and investors were led to chase returns and hedge with cryptocurrencies.
Bitcoin in particular has been doing well, with its price rocketing past numerous milestones over the Christmas weekend, passing $28,000. In January, by contrast, it sat at just $7,200.
Regulation will be more of an issue for crypto companies the bigger and more ubiquitous they become, Bloomberg reported. One example is the Securities and Exchange Commission (SEC) lawsuit against Ripple for allegedly holding a $1.3 billion unregistered securities offering. The suit named CEO Brad Garlinghouse and Co-Founder Chris Larsen as parties involved in the activity.
The controversy is centered around whether Ripple is considered a security or a currency. Ripple's contention is that it is a currency and doesn't need to go through the SEC for an offering.
Stephanie Avakian, director of the SEC’s Enforcement Division, said on CNBC that Ripple is being sued because it "failed to register their ongoing offer and sale of billions of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to our robust public market system,” PYMNTS reported.
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