Cryptocurrencies push lower as regulatory pushback spreads
MOST cryptocurrencies were lower, with the native token of the Binance exchange dropping the most since a November market meltdown, as the regulatory crackdown on the digital-asset sector heats up.
Binance Coin dropped as much as 11 per cent to US$279.50, erasing a portion of its gains registered during a broader market recovery in January. It tumbled about 18 per cent on Nov 9, when Binance pulled out of talks to purchase failed rival FTX. Cardano, Solana, Polygon and other so-called altcoins were lower. Bitcoin was little changed.
The New York State Department of Financial Services said on Monday (Feb 13) it had directed Paxos Trust to stop issuing new tokens of crypto’s third largest stablecoin, a Binance-branded coin known as BUSD that has roughly US$16 billion in circulation. BUSD fell below the one-to-one ratio versus the dollar that it aims to maintain.
Withdrawals of stablecoins including BUSD from Binance’s customers jumped following an initial announcement from Binance disclosing the decision. Blockchain data firm Nansen estimated that Binance saw more than US$1 billion worth of stablecoin in outflows in the past week. BUSD worth about US$144 million were redeemed back to dollars in just a few hours, said Andrew Thurman, researcher at Nansen.
“Binance will continue to support BUSD for the foreseeable future,” Changpeng Zhao, CEO of Binance, said in a Twitter thread. “We do foresee users migrating to other stablecoins over time. And we will make product adjustments accordingly. eg, move away from using BUSD as the main pair for trading, etc.”
Crypto markets have since held mostly steady after an initial drop, as investors grappled with the implications of the development. The move by the New York financial watchdog follows a months-long rout in digital asset prices that led to several high-profile company and project collapses. Last week, crypto exchange Kraken said it will scrap so-called staking services in the US and pay US$30 million to settle claims by the US Securities and Exchange Commission that the staking broke rules.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Both Binance and Kraken saw outflows of users’ funds, given regulatory concerns over the two platforms. Nansen’s data shows that over the past 24 hours. The net outflow, the difference between the value of crypto coming into and leaving the exchange, was around US$859.5 million on Binance. That amount for the much smaller exchange Kraken is at around US$127.7 million.
Bitcoin, the largest digital asset by market value, fell about 0.5 per cent to US$21,635 as of 1.36 pm in New York. Second-ranked Ether shed about 1.7 per cent to US$1,486.
Stablecoins like Paxos’s BUSD, Tether’s USDT and Circle’s USDC are crypto tokens that are intended to hold a set value, for example US$1. They come in a variety of forms and some are underpinned by reserves like cash and bonds. Investors often park funds in stablecoins as they move between crypto trades, with around US$136 billion currently in circulation.
Elsewhere, shares of Coinbase Global fell for a seventh straight session. The large US crypto exchange lost almost a quarter of its value this week in the wake of rival exchange Kraken saying it was settling with the SEC over allegations it had broken the agency’s rules with its staking products.
MicroStrategy, the enterprise-software maker better known as the largest public holder of Bitcoin, snapped a three-day slide. BLOOMBERG
Share with us your feedback on BT's products and services
