Bitcoin extended losses as it approached the lowest price for the year after Japanese regulators hit six of the country’s biggest cryptocurrency trading venues with orders stipulating business improvements.
The biggest virtual currency fell as much as 10 percent to US$6,045.31, testing the low for the year of US$5,922 that was set on Feb. 6, according to prices compiled by Bloomberg. The MVIS CryptoCompare Digital Assets 10 Index tumbled as much as 11 percent.
Some of the targets of Japan’s regulator were quick to react.
Bitflyer Inc said it would stop accepting new customers and also review identity verification for some existing users after it received an order from Japanese Financial Services Agency (FSA). The FSA called for improved measures against money laundering at all the exchanges. The companies must submit their plans by July 23.
Peer-to-peer money has come under fresh pressure in the past few weeks after two South Korean exchanges said they were hacked.
That raised fresh concerns about the security of investor holdings. New pressure in Japan, one of the most cryptofriendly jurisdictions, demonstrated the market’s fragility to regulatory moves in the absence of much positive news.
“The market is still trading on low volumes and has yet to break out of its current downtrend, leaving itself susceptible to sell-offs,” said Ryan Rabaglia, head trader with cryptocurrency dealing firm Octagon Strategy Ltd in Hong Kong. “Although the market reacted negatively, I view this as a positive for the industry as a whole.”
Bitcoin is down 57 percent this year. Ethereum and litecoin both retreated by more than 14 percent.
QUOINE, Bitbank, BTCBOX, BITPoint Japan and Tech Bureau were the other exchanges penalized by the FSA. While Japan created a regulatory framework for exchanges last year that proved a lure for bourses, the US$500 million heist in January at Coincheck Inc prompted the country’s regulators to increase scrutiny of the industry.
In April, bitFlyer tightened its anti-money laundering rules after the Nikkei newspaper reported that users could perform some limited functions without fully completing customer verification.
“The market is quite soft, with liquidity lower across the board, especially compared to recent quarters,” said Tiantian Zhang Kullander, a partner of Amber AI Group, a cryptohedge fund.
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