Increased regulatory attention on digital currencies will help them develop into a mature investment product, several analysts said.
The U.S. Securities and Exchange Commission signaled late Tuesday that U.S. securities law may apply to initial coin offerings, sales of new digital coins to fundraise for projects based on the same blockchain technology as bitcoin.
"As the regulation of cryptocurrencies progresses, that's actually a good thing for the currencies because they won't be seen as the Wild West," said Monica Summerville, senior analyst in fintech at Tabb, a capital markets research and consulting firm.
The SEC announcement specifically stated that a token launched last year called DAO was a security and issuers of such blockchain-based securities typically must register offers and sales with the SEC. But the regulator stopped short of bringing charges against DAO, and instead said it wanted to "caution the industry and market participants."
"This removes a significant overhang from the market," Brian Kelly, CNBC contributor and founder of BKCM, which runs a digital assets strategy, said in an email. "The worst case scenario was a complete and total ban which has now been removed."