Bitcoin, Ether and other cryptocurrencies may be seeing the beginning of the end

Risks are rising after warnings from U.S., Chinese regulators
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Opinion: Bitcoin, Ether and other cryptocurrencies may be seeing the beginning of the end
By Brett Arends
Published: Sept 7, 2017 10:12 a.m. ET

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Risks are rising after warnings from U.S., Chinese regulators
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So you’ve made a ton of money from bitcoin, Ether and other cryptocurrencies. Sure, they’ve defied the doomsayers time and again. Which likely makes this week’s shocking plunge in bitcoin and Ether just another buying opportunity. That’s where you may be wrong.

The sudden Chinese crackdown on the virtual coin fundraising of bitcoin BTCUSD, +3.13% and other cryptocurrencies that caused the plunge is either the end of the beginning for the crypto-party — or, more likely, the beginning of the end. If you’re holding cryptocurrencies today, remember that no matter how much money you think you’ve made, you haven’t made a nickel until you’ve cashed it out.

And you might want to think twice, or even thrice, about the rising risks.

China took steps on Monday to stop “initial coin offerings” or ICOs. These are the crypto-bubble equivalent of the infamous IPOs during the late 1990s dot-com mania.

Additionally, Hong Kong’s regulator warned that cryptocurrencies may be securities for legal purposes and that these ICOs may be subject to securities laws — echoing similar rumblings from the U.S. Securities and Exchange Commission.

Read: Confused about bitcoin? 10 things you need to know

This isn’t just a passing cloud. This is potentially a big deal. Blockchain technology may be as amazing as its proponents claim. But translating that into a financial mania for cryptocurrencies depends on some huge, and flawed assumptions. First among them: the idea that governments are just going to sit idly by and let cryptocurrencies flourish.

Sure, cryptocurrencies could be used by all sorts of lovely people for all sorts of lovely things. But shadow, unregulated currencies can also be used by say, tax evaders, drug dealers, money launderers and other criminals.