The price of ether (ETH) plummeted Tuesday after The Wall Street Journal reported the cryptocurrency is the focus of a regulatory inquiry.
The second-largest cryptocurrency by market capitalization Tuesday plunged to a low of $633.11, down 5.5 percent from $670.04 late Monday, according to ThirtyK price data supplied by CoinMarketCap. By late Tuesday, however, the price had recovered and risen to $673.17.
The sharp selloff came in the wake of a Journal report saying regulators are discussing whether ether and some other widely traded cryptocurrencies should be regulated as securities.
Ether’s blockchain is generated by the Ethereum open-source distributed computing platform.
Officials from the Securities and Exchange Commission and the Commodity Futures Trading Commission are meeting May 7 to discuss whether to apply the same rules to ether and other widely traded cryptocurrencies as they do to stocks, the Journal reported, citing people familiar with the matter.
The CFTC has decided that bitcoin (BTC) is a commodity, so it is not subject to investor-protection laws enforced by the SEC, the Journal noted.
At issue for other widely traded cryptocurrencies, however, is whether their issuers can influence the currencies’ value in the same way that corporate managers can influence their companies’ stock prices, the Journal reported. Read more here.