Displaying items by tag: bitcoin

(Seoul)

We have been warning that one of the big risks for bitcoin is the threat of regulation, and today that prognostication is looking true. The cryptocurrency plunged yesterday after South Korean regulators took steps to shut down the trading of bitcoin on the country’s exchanges. The government views trading of the currency as akin to gambling. Bitcoin fell as much as a quarter in South Korea and over 13% on global exchanges. It is now trading between $12,000 and $13,000.

FINSUM: Bitcoin is an interesting asset class, but because it operates in a gray area of legality, it is fraught with extreme regulatory risk.

(New York)

The comment heard round the world seems to have been eating JP Morgan CEO Jamie Dimon. Several months ago Dimon made the much publicized comment that Bitcoin was “fraud”. The CEO is one of the most respected on Wall Street and the comments have been the bane of the cryptocurrency for some time. However, speaking at a conference yesterday, Dimon said about his statements that “I regret making them”.

FINSUM: The funny part of about this new statement is that it was accompanied by several more veiled expressions of dislike for bitcoin, such as saying he is “not interested in the subject at all”.

(New York)

Merrill Lynch took a big step yesterday. Seemingly espousing the same view as Jamie Dimon, the firm officially blocked clients and all advisors who act on their behalf from trading Bitcoin. The firm does not believe in the asset class’ investment suitability. The ban extends beyond direct purchases of the cryptocurrency and extends to all futures and funds that trade in bitcoin. Advisors reportedly have mixed feelings on the move, with some saying it is a missed opportunity.

FINSUM: In our opinion, Bitcoin is a solid idea and is here to stay, but it just has so much regulatory risk right now that we think only accredited investors should be allowed to have it in their portfolios.