Cryptocurrency’s rollercoaster ride took a sharp downwards swing Wednesday as the Securities and Exchange Commission issued a statement warning against unlicensed crypto exchanges. The commission confirmed that any exchange that allows investors to buy and sell securities — whether that’s boring government bonds or the latest ICO — needs to comply with existing SEC rules for exchanges.

Long-term, that could have a beneficial effect for the market, reducing volatility by ensuring confidence in the marketplace’s primary trading mechanisms. But looking at the charts right now, it seems that investors aren’t so stoked about the news.

Leading cryptocurrencies are down nearly 10 percent over the last 24 hours at the time of writing, with the bulk of the drop coming after the news of the SEC’s announcement. According to price indexes kept by CoinMarketCap, Bitcoin is down 9.17%, Ethereum fell by 9.36%, and Ripple fell by 9.97%. Bitcoin Cash and Litecoin are down similar amounts. Cryptocurrency speculators have traditionally responded negatively to any indication that crypto is liable to be regulated, so the price drop isn’t exactly a surprise.

In its statement, the SEC didn’t specifically say that any particular exchange would be subject to regulation, or set out a time frame for enforcement action. Much of the legal manouvering is likely to come down to the definition of a “security,” because depending on who you talk to, blockchain-based cryptocurrencies are a currency, a store of value, or the underpinning for a new set of libertarian micro-nations. The SEC’s statement address currencies as well as ICOs, the recent wave of fundraising rounds based on crypto that have been rife with scams:

Online trading platforms have become a popular way investors can buy and sell digital assets, including coins and tokens offered and sold in so-called Initial Coin Offerings (“ICOs”).  The platforms often claim to give investors the ability to quickly buy and sell digital assets.  Many of these platforms bring buyers and sellers together in one place and offer investors access to automated systems that display priced orders, execute trades, and provide transaction data.

A number of these platforms provide a mechanism for trading assets that meet the definition of a “security” under the federal securities laws.  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 federal regulatory framework governing registered national securities exchanges and exempt markets is designed to protect investors and prevent against fraudulent and manipulative trading practices.

Online crypto exchanges have experienced growing pains as interest in cryptocurrencies has ballooned over the last year. Exchanges have been hacked, servers have been swamped by waves of traffic, and customers have even had accounts erroneously drained of cold hard cash.

Throwing a tire into the dumpster fire was a preliminary injunction handed down yesterday by Judge Jack B. Weinstein, ruling against a cryptocurrency trading advice firm in a case brought by the Commodity Futures Trading Commission. The case isn’t necessarily notable because of the defendant — there are plenty of shady crypto firms where that one came from — but rather the precedent it sets. The injunction holds that cryptocurrencies fall under the regulatory purview of the Commodity Exchange Act, a 1936 law that provides the framework for the trading of commodities and futures.

That ruling (and the precedent it sets) is virtually guaranteed to be tested again and again in court, but if the decisions keep going the government’s way, cryptocurrencies could find themselves under intense regulation in the near future.

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