Bitcoin retreats as new SEC chief calls for tighter regulation

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·Senior City Correspondent, Yahoo Finance UK
·2-min read
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Gary Gensler, chairman of US Securities and Exchange Commission. Photo: Chip Somodevilla/Getty Images
Gary Gensler, chairman of US Securities and Exchange Commission. Photo: Chip Somodevilla/Getty Images

Bitcoin's (BTC-USD) recent price momentum faded on Tuesday morning, as investors responded to news that America's top financial watchdog wants tighter regulation of the space.

Gary Gensler, who took over the US Securities and Exchange Commission (SEC) in April, told Bloomberg in an interview published on Tuesday that he wanted more regulation of cryptocurrency in order to protect consumers.

"If somebody wants to speculate, that’s their choice, but we have a role as a nation to protect those investors against fraud," Gensler told the news wire, saying he was specifically targeted cryptocurrency exchanges for regulation.

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

Bitcoin was down 3.8% to $38,587 ($27,754) at just before 9am in London. It marked a return to levels seen last Friday, before a weekend rally that saw bitcoin push above the symbolic and closely watched level of $40,000.

Watch: What is bitcoin?

Other cryptocurrency prices were under pressure on Tuesday morning. Ethereum (ETH-USD) was down 4.5% to $2,488 and XRP (XRP-USD) was 5% lower at $0.71. The value of the entire cryptocurrency market was down 3.8% over the last 24 hours, according to data provider CoinMarketCap.com.

Read more: How to spot – and avoid – cryptocurrency scams

Naeem Aslam, chief market analyst at Avatrade, pinned the price declines on Gensler's comments.

"He has made it clear that he wants to protect investors and that means more regulation," Aslam said. "Of course, the entire concept of Bitcoin and most of the other cryptocurrencies is to ward off regulatory burden.

"The fact is that the crypto world has changed substantially. We have institutional players who are making big moves every day. Protecting consumer and investors is the right step."

Regulators around the world have recently launched a crackdown on crypto exchanges, a central part of the ecosystem. Exchanges such as Binance and DeFi have been forced to make changes such as limiting leverage and withdrawals.

Cryptocurrency enthusiasts had hoped Gensler would be a booster for the industry. He is one of the few experts on cryptocurrencies among international financial regulators. Gensler previously taught a class on blockchain, the technology underpinning cryptocurrency, at MIT.

Watch: What are the risks of investing in cryptocurrency?

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