Bitcoin fell on the third day of trading in New York and briefly fell below the $40,000 mark for the first time since August, as the cryptocurrency faced growing criticism from regulators.
As of 17:22 New York time, the cryptocurrency, the largest by market capitalization, fell about 7 per cent to $40552. Other cryptocurrencies, including the etheric currency and the Lettercoin, also fell.
In a discussion on cryptocurrencies on Tuesday, Gary Gensler, chairman of the Securities and Exchange Commission (SEC), said banks and other companies had failed to provide private currency in the past.
Bitcoin fell
Gensler reiterated the enormous power that U.S. securities regulations give his agency over digital tokens. He also said there were "gaps" in the regulation of digital tokens that Congress could help fill, such as regulating cryptocurrency exchanges.
At the same time, the US institution, which was once pinned on high hopes by the cryptocurrency world, is now issuing a strong warning to the industry that it is in danger of repeating the toxic culture it had before the 2008 financial crisis.
Michael Hsu, acting director of the Office of the Comptroller of the currency, said on Tuesday that encrypted currencies and decentralized finance may be turning into a threat to the financial system, just as some derivatives brought them close to collapse more than a decade ago.