Buy bitcoin, or sell ahead of possible Asia ban?

The song remains the same in bitcoin world. As predicted, the cryptocurrency has returned to test support at $10,000, with regulatory news continuing to pressure markets to the downside. Bitcoin fell as low as $9,952 today, according to coinmarketcap, failing to stay above $12,000 for long since Friday, but has bounced back to currently trade at $11,249.

Altcoins were not immune from the fallout, initially dropping in sympathy, but they too have staged a sharp comeback.

Ethereum and Ripple were at one stage down 10% and 8% respectively over the past 24 hours, but have since recovered somewhat to trade 2% higher in Ethereum's case and 16% up for Ripple. Current market capitalisation of the sector stands at $547 billion, a far cry from highs just above $813 billion earlier this month.

A rising crescendo of warnings from bankers and regulators is clearly unnerving some market participants, although the bounce from lows today shows that there are plenty in the market who are buying the dips at the $10,000 support level.

Investment bankers speak out at Davos
Goldman Sachs says there's "no doubt" that last year's astronomic price rise has pushed the bitcoin "into bubble territory", likening it to tulip mania in 17th century Holland, but with bells on. It has produced charts showing the bitcoin price surge is more than three times that of the peak in tulip mania and another chart showing the price run up of Ethereum makes bitcoin's look puny, at 900 times greater than the bitcoin peak.

Speaking at the World Economic Forum gathering in Davos, Switzerland, Axel Weber, UBS chairman, told CNBC: "Retail clients, who don't fully understand these products, should be protected from going into these products." The boss of the Swiss investment bank said it was "not an investment we would advise".

The US Securities and Exchange Commission (SEC) again warned against investing in initial coin offerings, saying it was "disturbed" by reports it was receiving of some ICO promoters claiming that their products did not come under security law.

The SEC specifically ruled last year that ICOs do have to abide by securities regulations unless they could be shown to be selling utility tokens.

SEC chairman Jay Clayton said in a statement: "I have instructed the SEC staff to be on high alert for approaches to ICOs that may be contrary to the spirit of our securities laws and the professional obligations of the US securities bar."

There has been an identifiable trend in the US for a number of ICOs to drop the "coin offering" terminology, to instead describe the fundraising activity as token generation events. The SEC is clearly not fooled or amused.

In the SEC statement made yesterday, Clayton also signalled interest in public companies seeming to "pivot" towards blockchain technology by, for example, simply changing their name.

"The SEC is looking closely at the disclosures of public companies that shift their business models to capitalize on the perceived promise of distributed ledger technology and whether the disclosures comply with the securities laws, particularly in the case of an offering."

South Korea ban unlikely despite stricter regulation
In Asia, South Korea's Financial Services Commission (FSC) confirmed new rules, already trailed in advance, that anonymous accounts would no longer be allowed in the country. A statement from the FSC said: "Those who do not have their real-name accounts at the same bank with the exchanges will not be allowed to make new deposits into the exchanges' accounts. They will be only allowed to make withdrawals."

Also, persons who do not have bank accounts in the country would no longer be able to open accounts on South Korean crypto exchanges. And, as was also announced a couple of weeks ago, minors would be barred from buying crypto.

Despite the South Korean regulator's new rules being flagged up in advance, it nevertheless led to some selling, although the country's share of global trading volume remains unchanged, according to analysis site Cryptocompare, at around 5% of the total

It still seems unlikely that there will be an outright ban on cryptocurrencies in the country, given that one million people trade in the market. The deadline for the enforcement of the new rules is 30 January.

All the major South Korean exchanges - Coinone, Korbit and Bithumb - have indicated that they will abide by the stricter account requirements. The government has urged exchanges to tighten their surveillance of possible money laundering activity.

Japan remains the outlier among the advanced economies, where bitcoin is legal tender and 11 exchanges have a licence from the government. One of those exchanges is BitFlyer, which at the end of last year opened a branch of its business in the US, and has now received approval to start operations in the European Union.

Chief executive Yuzo Kane says his company is the first crypto exchange to be licensed in Japan, the US and the EU. "I am proud that we are now the most compliant virtual currency exchange in the world; this coveted regulatory status gives our customers, our company and the virtual currency industry as a whole a very positive future outlook," said Kane, who is also the founder of the company.

$4 million theft, petro confusion
Elsewhere, the wallets of Internet of Things-focused blockchain project IOTA (11th-placed coin by market cap), were attacked by fraudsters who set up a fake site claiming to generate the 81-character "seed" needed to back up wallets, leading to an estimated $4 million being stolen before the community was alerted. The IOTA community has long been advised not to use online seed generators.

In a possible indication of the future direction for trading, Ledger, owner of the popular hardware wallet used to store coins in cold storage called Nano Ledger, has signed a deal with decentralised exchange Radar Relay. The tie-up will allow wallet-to-wallet transfer of coins in what is thought to be an industry first. French company Legder has just closed a Series B funding round in which it raised $75 million. The round was led by UK-based venture capital form Draper Esprit.

The Venezuela cryptocurrency story continues, with the latest episode seeing a delegation from the government of the country visit Qatar to drum up support for the Petro cryptocurrency.

The petro is backed by Venezuelan oil reserves, but details are still unclear, despite the supposed accidental release of a whitepaper for the proposed currency, later denied to be authentic. Venezuela's parliament, which is controlled by the opposition, has ruled that the currency is illegal. Although Venezuela has the largest oil reserves in the world, production has collapsed 80%.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.