The US Securities and Exchange Commission plans to apply securities laws to everything from cryptocurrency exchanges to digital asset storage companies called wallets.
"If a platform offers trading of digital assets that are securities and operates as an 'exchange,' as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration," the commission said in its "Statement on Potentially Unlawful Online Platforms for Trading Digital Assets."
The statement expands scrutiny to companies involved with trading, as against previous publications focused on digital coins and their developers.
"I think it's one more message from the SEC that they view coins as securities and they encourage everyone in the space to ... follow securities laws," CNBC quoted Jason Gottlieb, partner at Morrison Cohen, where he leads the cryptocurrency litigation team.
The SEC statement made no mention of bitcoin which retreated 10 per cent below the psychological $10,000 level following the statement release.
A 1946 US Supreme Court case ruling is currently used to determine whether an asset is a security. According to the ruling, a security involves the investment of money in a common enterprise, in which the investor expects profits primarily from others' efforts.
Bitcoin fell around 50 per cent from its highs of almost $20,000 in December partly due to regulators worldwide clamping down on trading, mining and initial coin offerings. Also reports of hacking of Asia-based Binance, one of the largest exchanges, added to fears.
Further, a number of cryptocurrency trading platforms, like Coinbase Inc's GDAX, are not registered as exchanges with the SEC and instead hold money transmission licenses with separate states.
The platform Gemini, for instance, is regulated by the New York State Department of Financial Services as a trust company, according to its website.