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Cryptocurrency Crash Hits a New Low

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The 2018 selloff in cryptocurrencies plumbed new depths on Wednesday after the U.S. Securities and Exchange Commission dented enthusiasts’ hopes for a VanEck exchange-traded fund backed by Bitcoin.

A broad selloff in coins of all sizes reduced the market value of virtual currencies tracked by to about $230 billion, the lowest level since November. Digital assets have now lost about $600 billion since crypto-mania peaked in January, more than the market value of all but the four biggest companies in the S&P 500 Index.

The SEC postponed its decision on whether to approve the Bitcoin ETF, dealing a blow to bulls who had bet a green light from the regulator would help sustain last month’s tenuous rally. Optimists are counting on the wider adoption of cryptocurrencies to support prices, but regulators and many institutional investors have remained wary amid concerns over security and market manipulation.

“The market overreacted to a slew of of applications to the SEC that had no chance of getting a quick acceptance and are now overreacting to the highly expected outcome,” said Hany Rashwan, chief executive officer of crypto startup Amun Technologies Ltd. “The SEC is likely to delay until February of 2019 and the chances of a Bitcoin ETF approval in 2018 have always been low.”

Bitcoin dropped 5.7 percent to $6,484 as of 12:01 p.m. in New York, after earlier falling as much as 7 percent. It’s down 55 percent this year, according to Bloomberg composite pricing. Ripple slumped as much as 12 percent, while Ether and Litecoin sank at least 5 percent. All but two of the 100 biggest virtual currencies tracked by slumped over the past 24 hours.

The SEC now has until Sept. 30 to “approve or disapprove, or institute proceedings to determine whether to disapprove” a proposed rule change from Cboe Global Markets Inc. that would allow the listing of an ETF from VanEck Associates Corp. and SolidX Partners Inc., the regulator said in a statement. An initial deadline was due to expire next week.

The regulator denied an exchange’s request to list a similar fund run by Tyler and Cameron Winklevoss late last month. Some had argued that VanEck’s proposal was more likely to gain approval thanks in part to plans for a high minimum share price that would discourage retail investors. The SEC received more than 1,300 comments on the proposed rule change as of Aug. 6, it said.

News hasn’t been all negative this week for digital currencies and their acceptance by Wall Street. Goldman Sachs Group Inc. is considering a plan to offer custody for crypto funds, people with knowledge of the matter said.

Still, the skepticism among regulators was apparent in comments this morning from Federal Reserve Bank of Richmond President Thomas Barkin, who said that digital money doesn’t yet have “the level of protection that you would hope for in a currency.”