Bitcoin fell on Tuesday after Securities and Exchange Commission Chair-designate Gary Gensler said that keeping fraud and manipulation out of cryptocurrency markets represents a challenge for the agency.
The comment came in his Senate confirmation hearing.
Bitcoin recently traded at $47,852, down 2.45%. The digital asset has been quite volatile throughout its 12-year history, with frequent double-digit percentage moves in recent days. It has more than quintupled in the past year.
Gensler’s comments came a day after New York State Attorney General Letitia James issued two investor alerts in response to the “extreme risk” that she says New Yorkers face when they invest in cryptocurrencies.
The first alert urged “extreme caution when investing in virtual currencies."
The second warned brokers, dealers, salespersons, and investment advisers that they could face civil and criminal liability if they don’t fulfill their obligations regarding registration with the State of New York when they do business with virtual currencies.
“Too often, greedy industry players take unnecessary risks with investors’ money, but, today, we’re leveling the playing field and issuing alerts to both investors and industry members across the nation,” James said.
“All investors should proceed with extreme caution when investing in virtual currencies. Cryptocurrencies are high-risk, unstable investments that could result in devastating losses just as quickly as they can provide gains.”
And when it comes to industry professionals, “we will not hesitate to take action against anyone who violates the law,” James said.
Treasury Secretary Janet Yellen said last week that the Federal Reserve and other central banks should investigate digital currencies that could make payments faster and cheaper.