Markets: Bitcoin slumps in broad sell off amid SEC charges against Kraken, regulation worries

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Bitcoin sank below US$22,000 in Friday morning trading in Asia after the U.S. Securities and Exchange Commission slapped a fine on the Kraken exchange, sparking concerns that regulators are set to take a tougher line on cryptocurrency trading. The move adds to existing investor worries 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 staking for U.S. retail customers

Fast facts

  • Bitcoin fell 4.93% in the past 24 hours to US$21,815 at 8 a.m. in Hong Kong, and lost 7% over the past calendar week, according to data from CoinMarketCap. Ether dropped 6.32% to trade at US$1,547, logging a 5.86% weekly loss.

  • Solana, the biggest loser among the top 10, slid 11.81% in the past 24 hours, pushing its weekly loss to 15.69%. Shiba Inu dipped 11.66% in the last 24 hours, reversing gains over the past week to remain little changed.

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

  • Brian Armstrong, chief executive officer of Coinbase Global Inc., the largest crypto exchange in the U.S., said on Wednesday that the SEC may be considering a broad ban on crypto staking 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, typically more tokens — a practice widely used on various “proof-of-stake” blockchains including Ethereum, the second biggest.

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

  • U.S. equities fell on Thursday, as traders assessed earnings and job data. The Dow Jones Industrial Average lost 0.73%. The S&P 500 Index slipped 0.88% and the Nasdaq Composite Index closed down 1.02%. Trading this week has been choppy, with several U.S. Federal Reserve governors stating more interest rate increases are coming and rates may stay higher for longer to beat back inflation.

  • Analysts at the CME Group predict a more than 90% chance the Fed will raise interest rates by a further 25 basis points at its next meeting in March. U.S. interest rates are currently at 4.5% to 4.75%, the highest in 15 years, and Fed officials have repeatedly indicated they could raise rates to as high as 5%.

  • Figures released Thursday showed that U.S. initial jobless claims, or applications for unemployment benefits, rose to 196,000 last week. While that is higher than the 183,000 in the previous week, the claims are still at historically low levels and indicate labor demand remains high. More people in work would typically be good news for an economy, but with the Fed focused on slowing inflation, strong economic indicators can indicate more interest rate hikes will follow.

See related article: Robinhood aims to buy-back its shares seized by Department of Justice in FTX failure

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