Bitcoin dropped to below $8,000 on Friday, reflecting a plunge of almost 60 percent from its record high of more than $19,000 in December.  The crytpocurrency’s steep decline comes as regulators from the Securities & Exchange Commission and the Commodity Futures Trading Commission (CFTC) are scheduled to testify Monday before the Senate Banking Committee. Regulators in countries including South Korea and India have cracked down on the cryptocurrency market over concerns about fraud and volatility, among other issues. Financial regulations were developed at a time when few could have imagined the development of an asset class like bitcoin and other cryptocurrencies, which are lines of code that hold monetary value and  are designed to provide anonymity to their owners.

Their dramatic surge in popularity and value caught many in the investing world by surprise, adding to the challenges of regulating the market.  Fans of cryptocurrencies argue they are the equivalent to gold or other commodities, which are regulated in the U.S. by the CFTC. Meanwhile, when new tokens come to market through Initial Coin Offerings (ICOs), they fall under the jurisdiction of the Securities & Exchange Commission.    One problem facing regulators is that the legal standard for defining a security was set more than 70 years ago in a Supreme Court Case called SEC v. W.J.

Howey Co. But that legal definition hasn’t been tested much in the years since, according to Clyde Tinnen, a partner in the corporate team at Withers.

“The federal government has to play a role there,” he said in an interview. “No one has certainty where this train is going.”

He added, “In some cases, it’s probably better to wait to try and understand the end-use applications.” On Monday, the Senate Banking Committee will hear from the SEC and the CFTC about their approach to the issue. Read more from cbsnews.com…

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