Crypto markets carry on after SEC clampdown on largest exchanges

Crypto markets carry on after SEC clampdown on largest exchanges

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Crypto advocates seem to be talking calmly about the US Securities and Exchange Commission’s growing crackdown on the digital asset sector.

Token prices were mostly higher or little changed on Tuesday after the agency accused Coinbase Global of conducting an illegal exchange.

Many coins were on the verge of recouping the losses recorded on Monday, when the regulator sued rival Binance, alleging a large number of violations.

Fund outflows from Binance and Coinbase clients initially increased when the first lawsuit was filed on Monday before declining over the past 24 hours, according to blockchain data from two analytics firms.

Overall, Binance has been hit with around $1.3 billion of net outflows as of 11:30am New York time on Tuesday.

Nansen, who said that Coinbase does not disclose its crypto wallets on blockchains, estimated that the American company had an outflow of around $1.28 billion during the same period. Activity appears to have subsided on Tuesday.

Julio Moreno, head of research at CryptoQuant, said that outflows have been “silenced” since news broke about the SEC’s lawsuit against Coinbase.

In the lawsuits against Binance and Coinbase, the SEC listed many tokens as unregistered securities, including Binance’s BNB tokens, Cardano’s ADA, Solana’s SOL, Polygon’s MATIC, Filecoin’s FIL, Algorand’s ALGO, and Dfinity’s ICP. Prices for all but the Polygon token were positive on Tuesday.

“Some of the tokens listed as securities were relatively underperforming, but I think this shows that US institutions had already decreased their relative exposure,” said Shiliang Tang, chief investment officer at crypto investment firm LedgerPrime.

“There’s also not a lot of leverage in the system in crypto, so we’re not seeing a lot of liquidations.”

Bitcoin, which makes up about half of the $1.1 trillion crypto market, rose 5.51% to $27,009 on Tuesday.

It has plunged 5.9% on Monday, falling to the lowest price level since April. The market benchmark continues to rise 58% this year, after falling 64% in 2022.

Underpinning Bitcoin’s partial comeback since the start of the year were expectations that the banking crisis that erupted in the US in March would force the Federal Reserve to pause on rate hikes.

That allowed Bitcoin bulls to make the case that the token would benefit from lower real interest rates and that it offers refuge from the turmoil in traditional finance.

According to Clara Medalie, director of research at crypto data firm Kaiko, Binance and its American platform Binance US accounted for 54% of the global crypto trading market share, while Coinbase accounted for around 6.5%.

However, among US exchanges, Coinbase’s volume stood at 53% of trading volume, making it the largest in the United States.

As Bloomberg reported, after Binance and CEO Changpeng Zhao were sued by the Commodity Futures Trading Commission in March, some trading shops like Jane Street Group and Jump Crypto have already reduced their exposure to cryptocurrencies.

“Larger trading shops have been more cognizant of how they trade on Binance since the CFTC lawsuit dropped, so much of the potential risk has already been managed,” said Michael Safai, a partner at the quant trading firm. Dexterity Capital.

“If exchanges are going to be affected by liquidity, that process already started when the CFTC stock fell, possibly even earlier, so this is a loss,” said Austin Campbell, an adjunct professor at Columbia Business School. that he runs a consulting firm focused on digital assets.

“The only caveat is that US-only exchanges could be in a world of pain if people really believe they are illegal and no one will trade with them.”

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