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Bitcoin (BTC-USD) is set to end the week 7.7% lower as sentiment was hit by renewed macroeconomic concerns as well as regulatory scrutiny after the U.S. SEC shut down cryptocurrency exchange Kraken’s staking service.
Broader financial markets were weighed by increasingly hawkish commentary from Federal Reserve speakers, in response to recent data that signaled a stubbornly resilient labor market.
Meanwhile, Kraken ended its crypto asset staking-as-a-service program and will pay $30M to settle the SEC’s charges. The regulator alleged that Kraken failed to register its staking program, which exposed investors to risks with minimal protection.
“As the SEC has so far not even approved a Bitcoin spot ETF, it seems unlikely that it would have approved a slightly more obscure product like staking,” said Markus Thielsen, head of research, Matrixport. “While the SEC enforcement is negative for the industry, it excluded U.S. crypto users from being part of the innovation. The winners will likely be staking providers in Asia.”
Coinbase (COIN) CEO Brian Armstrong warned that the SEC may want to get rid of crypto staking for retail customers entirely.
Bitcoin (BTC-USD) remained within $21.55K-$23.68K this week, stalling its rally this year. The global crypto market cap currently stands at $1.01T, down 0.7% over Thursday, according to CoinMarketCap.
Regulatory Updates
- Fed Board Governor Christopher Waller called crypto a “speculative asset, like a baseball card.” He also cautioned that if the price of cryptos drop to zero, “don’t expect taxpayers to socialize your losses.”
- But Philadelphia Fed President Patrick Harker said cryptos will likely remain in demand despite the recent bear market.
- Meanwhile, the SEC warned investors that crypto investments in some self-directed IRAs may be unregistered securities.
Contagion Continues
- Crypto exchange LocalBitcoins is shutting down after operating for over 10 years as a result of the “very cold crypto-winter”.
- Crypto ATM operator Coin Cloud filed for Chapter 11 bankruptcy protection, with estimated liabilities of up to $500M. The company owes over $100M to insolvent crypto lender Genesis, its largest creditor.
- Digital Currency Group began offloading shares in trusts operated by its unit Grayscale Investments at a deep discount as it seeks to raise funds to repay creditors of its unit Genesis.
- Ishan Wahi, a former Coinbase (COIN) executive, reportedly pleaded guilty to two counts of conspiracy to commit wire fraud, in the first ever crypto insider trading scheme.
Notable News
- Hut 8 Mining (HUT) will merge with US Bitcoin in an all-stock merger of equals that’s expected to give the combined company a market cap of ~$990M. The news sent crypto mining stocks lower as more consolidation is expected in the sector.
- Deutsche Bank’s asset management unit, DWS Group, is reportedly considering taking minority stakes in two crypto firms as a means to spark growth.
- PayPal has halted stablecoin work as New York regulators are reportedly investigating its key partner in the project.
Bitcoin price
- Bitcoin (BTC-USD) dipped 0.7% to $21.64K at 7 pm ET and ether (ETH-USD) fell 2.1% to $1.51K.
- SA contributor Ryan Wilday said bitcoin’s (BTC-USD) rally over the last month is promising, but bulls have more work to do to confirm that the bearish trend that began in 2021 has ended.
Crypto-related stocks that ended lower on Friday: CleanSpark (CLSK) -8.8%, Hut 8 Mining (HUT) -8.2%, Bitfarms (BITF) -6.6%. Coinbase (COIN) -4.3%, Riot Platforms (RIOT) -2.5%.
