Bitcoin declines in broad sell-off amid SEC charges against Kraken, worries about regulation

by James · February 10, 2023

Bitcoin dipped below $22,000 in early morning trading in Asia on Friday after the US Securities and Exchange Commission issued a fine on the Kraken exchange, raising concerns that regulators are set to take a tougher line against cryptocurrency trading. The move adds to existing investor concerns about macroeconomic trends, such as higher interest rates. Ether fell along with all other top 10 non-stablecoin cryptocurrencies.

See related article: Coinbase CEO Brian Armstrong Says SEC Has ‘Terrible’ Idea to Ban Crypto Betting for US Retail Customers

Fast facts

Bitcoin fell 4.93% in the past 24 hours to $21,815 at 8 a.m. in Hong Kong, losing 7% over the past calendar week, according to data from CoinMarketCap. Ether fell 6.32% to trade at $1,547, for a weekly loss of 5.86%.
Solana, the biggest loser among the top 10, fell 11.81% in the last 24 hours, pushing its weekly loss to 15.69%. Shiba Inu fell 11.66% in the past 24 hours, reversing gains over the past week to remain little changed.
On Thursday, US-based crypto exchange Kraken said it was shutting down its on-chain staking services for US users to pay fees from the Securities and Exchange Commission (SEC). The SEC said in a statement Thursday that two Kraken subsidiaries failed to register the offering and sale of their stake programs, and that the exchange had agreed to pay $30 million to settle the charges.
Brian Armstrong, CEO of Coinbase Global Inc., the largest U.S. crypto exchange, said Wednesday that the SEC may consider a broad ban on crypto betting for U.S. retail users, which he called a “terrible” idea.
Staking refers to the process of crypto-investors depositing tokens into certain blockchains to receive rewards, usually multiple tokens – a practice widely used on various “proof-of-stake” blockchains, including Ethereum, the second largest.
“Today’s action should make clear 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.
U.S. stocks fell on Thursday as traders weighed earnings and jobs data. The Dow Jones Industrial Average lost 0.73 percent. 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 central bank governors stating that more rate hikes are on the way and interest rates may stay higher for longer to fight back inflation.
Analysts at CME Group predict a more than 90% chance the Fed will raise interest rates by another 25 basis points at its next meeting in March. US interest rates are currently at 4.5% to 4.75%, the highest in 15 years, and Fed officials have repeatedly indicated they may raise rates to as high as 5%.
Figures released Thursday showed that US initial jobless claims, or applications for unemployment benefits, rose to 196,000 last week. Although higher than last week’s 183,000, claims are still at historically low levels and indicate continued high demand for labor. More people in work would typically be good news for an economy, but with the Fed focused on slowing inflation, strong economic indicators may indicate more rate hikes will follow.