Regulators are going through cryptocurrency projects with a 'fine tooth comb'
- The SEC and CFTC released a joint statement about the cryptocurrency market Friday.
- The statement said the two agencies would crackdown on any entity in the digital coin space that isn't compliant.
- Michael Arrington, an adviser to blockchain startup aelf, told Business Insider the SEC is going through projects in the space with "a fine tooth comb."
The SEC and CFTC are paying closer attention to the digital coin market.
The Securities and Exchange Commission and Commodities Futures Trading Commission released a joint statement Friday emphasizing their commitment to take action against fraud in both cryptocurrencies and the initial coin offering market.
Here's the full statement (emphasis ours):
"When market participants engage in fraud under the guise of offering digital instruments - whether characterized as virtual currencies, coins, tokens, or the like - the SEC and the CFTC will look beyond form, examine the substance of the activity and prosecute violations of the federal securities and commodities laws. The Divisions of Enforcement for the SEC and CFTC will continue to address violations and bring actions to stop and prevent fraud in the offer and sale of digital instruments."
The price of bitcoin fell close to $11,000 at 1:40 p.m. ET from nearly $11,750 when the statement was posted online.
Michael Arrington, the head of Arrington XRP Capital, an investor in projects in the digital coin space, told Business Insider that the SEC recently reached out about one initial coin offering his firm was investing in. He said the financial watchdog is really starting to go through companies in the space with a "fine tooth comb."
"I'm telling companies to be prepared," he said in a phone interview.
Fears of a regulatory crackdown on the cryptocurrency market in South Korea and China sent markets into a tailspin earlier this week.
Recently, Arrington was named an adviser to aelf, a Singapore-based blockchain company with operations in China. He said that governments in Asia are concerned about loses in the crypto space disrupting other areas of the markets, but there is a massive amount of focus on advancing blockchain tech on the continent.
"I always focused a bit on China, where we've seen the market mature so fast," Arrington said. "There is a huge amount of enthusiasm and focus on these technologies."
Bitcoin recouped some of the losses just before 4:00 p.m. ET and was trading up 1.9% at $11,456 a coin.