Bitcoin Collapses in Broad Sell-Off Amid SEC Indictments Against Kraken, Regulatory Concerns

Bitcoin fell below US$22,000 in Friday morning trading in Asia after the US Securities and Exchange Commission fined exchange Kraken, sparking concerns that regulators are ready to take a tougher line on trading of cryptocurrencies. The move adds to existing investor concerns about macroeconomic trends, such as higher interest rates. Ether fell along with all other top 10 unstable cryptocurrencies.

See related article: Coinbase CEO Brian Armstrong Says SEC Has “Terrible” Idea to Ban Crypto Staking for US Retail Clients

Fast facts

  • Bitcoin fell 4.93% in the past 24 hours to US$21,815 as of 8am Hong Kong time and lost 7% in the last calendar week, according to data from CoinMarketCap. Ether fell 6.32% to trade at US$1,547, posting a weekly loss of 5.86%.

  • Solana, the biggest loser in the top 10, slipped 11.81% in the past 24 hours, pushing his weekly loss to 15.69%. The Shiba Inu is down 11.66% in the past 24 hours, reversing last week’s gains to remain little changed.

  • On Thursday, US-based cryptocurrency exchange Kraken said it had shut down its on-chain staking services to allow US users to settle Securities and Exchange Commission (SEC) charges. The SEC said in a statement Thursday that two Kraken subsidiaries failed to register the offering and sale of their staking programs and that the exchange had agreed to pay $30 million to settle the charges.

  • Brian Armstrong, chief executive officer of Coinbase Global Inc., the largest cryptocurrency exchange in the United States, said Wednesday that the SEC could consider a broad crypto staking ban for US retail users, which he called an “terrible” idea.

  • Staking refers to the process where cryptocurrency investors deposit tokens into certain blockchains to receive rewards, typically multiple tokens, a practice widely used on various “proof-of-stake” blockchains including Ethereum, the second largest.

  • “Today’s action should clarify to the market that staking-as-a-service providers must register and provide full, fair and truthful disclosure and investor protection,” SEC Chairman Gary Gensler said in the statement.

  • US stocks fell on Thursday as traders priced earnings and jobs data. The Dow Jones Industrial Average lost 0.73%. The S&P 500 index fell 0.88% and the Nasdaq Composite index closed down 1.02%. Trading this week has been choppy, with several US Federal Reserve governors saying that more interest rate hikes are on the way and that rates could stay higher for longer to counter inflation.

  • CME Group analysts expect a greater than 90% probability that the Fed will raise interest rates by an additional 25 basis points at its next meeting in March. US interest rates are currently in the range of 4.5% to 4.75%, the highest in 15 years, and Fed officials have repeatedly indicated they could hike rates as high as 5%.

  • Data released on Thursday showed that initial US jobless claims, or applications for jobless benefits, rose to 196,000 last week. While higher than the previous week’s 183,000, job claims are still at historically low levels, indicating that labor demand remains high. More people at work would typically be good news for an economy, but with the Fed focused on slowing inflation, strong economic indicators may point to further interest rate hikes to follow.

See related article: Robinhood aims to buy back its shares seized by the Justice Department if FTX goes bankrupt

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