Crypto market slips below $1 trillion as US regulatory pressure mounts

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The value of cryptocurrency markets has fallen below $1 trillion, according to data provider CoinMarketCap, as US regulators step up what appears to be an offensive against the industry.

BitcoinBTC was listed at $21,482 just after 1 p.m. in New York, down 1.4% from the previous 24 hours. Ether is at $1,476, down 4.3%. Binance CoinBNB, the fourth-largest cryptocurrency, fell 11.6% to $286 as regulators target the exchanges stablecoin Binance USD BUSD. This latest token is trading just below the $1 peg it is meant to hold.

Overall, cryptocurrencies are trading at around $996 billion after peaking earlier this month at just under $1.1 trillion. Although still up from last year’s lows below $800 billion, the market remains far from the 2021 high of nearly $3 trillion.

Last week, the U.S. Securities and Exchange Commission barred the Kraken exchange from providing interest to U.S. retail investors who lend it cryptocurrency, a process known as staking. The SEC has suggested that staking products in which owners surrender control of their assets to exchanges amounts to a securities offering, which must be registered and meet disclosure standards.

Cryptos are getting weaker as every trader worries about this SEC wave paralyzing with the crackdown on staking products and stablecoins. The news flow has been rather bearish for the crypto, and you can’t forget tomorrow’s inflation report which could be hot and cause problems for risky assets, said Edward Moya, senior analyst at the trading firm. OANDA, in a Monday note. It could be difficult for buyers to emerge until we see how Wall Street reacts to tomorrow’s inflation data, he added.

On Monday, cryptocurrency firm Paxos announced that it was ceasing to issue a version of BUSD that it created in partnership with Binance, the world’s largest cryptocurrency exchange.

Effective Feb. 21, Paxos will cease issuing new BUSD tokens in accordance with guidelines and in close coordination with the New York Department of Financial Services (NYDFS), Paxos said in a statement, adding that it would end its relationship with Binance for the Stablecoin BUSD brand.

The Paxos BUSD product, built on the EthereumETH blockchain and individually backed by US Treasury bonds and reverse repurchase agreements backed by these securities, is related to but separate from Binances’ self-issued BUSD. The latter is created independently by the crypto exchange on blockchains other than Ethereum and is not directly regulated by NYDFS.

Upon the announcement, traders rushed out of their BUSD positions, according to digital asset data provider Kaiko, with volume soaring to nearly half a billion dollars on the BUSD trading pair- tether within the hour immediately following the news. The decision will have a profound impact on the stablecoin space and overturn a pillar of Binance’s aggressive strategy for crypto dominance, Kaiko added.

The Wall Street Journal reported that the SEC plans to sue Paxos for violating investor protection laws, citing people familiar with the matter.

The agency appears to be stepping up its enforcement of crypto as it seeks its voice in policing the industry as Congress considers legislation that would make the Commodities Futures Trading Commission the primary regulator. Last week, Kraken agreed to pay $30 million in penalties and exit the staking market to settle SEC charges that it sold unregistered securities.

Attention is now turning to similar staking services offered to US clients from exchanges such as Gemini, Binance.US and Coinbase. Despite growing questions about the latest, Cathie Woods ARK has renewed its Coinbase stock buying spree after a nearly month-long hiatus. The company revealed on Friday that it recently purchased 162,325 Coinbase shares worth approximately $9.2 million at current prices. Coinbase shares are down about 1.6% today at $56.18 after trading above $80 earlier this month.

In other stock market updates, crypto-friendly bank Silvergate now ranks as the second most shorted stock on Wall Street, with more than 73% of its shares shorted, according to the latest interest report. short, published on February 9. Bank stocks have lost around 60% in the past three months. The bearish sentiment stems from its disappointing fourth quarter earnings report, in which Silvergate disclosed a nearly $1 billion loss, and the US Department of Justice’s investigation into its relationship with Sam Bankman Companies. -Frieds FTX and Alameda Research.

Silvergate shares are down around 4.5% today at $14.305. It closed at nearly $21 earlier this month.

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