The cryptocurrency sector continues to struggle this week in face of tightening regulations and knock-on effects from the wider stock market.
Following last week’s warning from the US Securities and Exchange Commission (SEC) to major crypto exchange Coinbase, the market suffered a blow that took almost 20 percent off the price of Bitcoin (BTC).
The warning, known as a Wells notice, threatened Coinbase with potential litigation in regards to its planned LEND program. LEND is a new service from Coinbase aimed at providing customers with the chance to earn interest on their crypto holdings.
While the warning appears to be an unnecessary attack on the cryptocurrency sector, it’s likely for safety reasons. Recently appointed SEC Chairman Gary Gensler has a history of support for cryptocurrencies, playing a key role in getting Bitcoin listed on the CME Futures Exchange in late 2017. However, back then he was heading up the Commodities Futures Trading Commission (CFTC), a significantly different role than that of SEC Chairman. This new role combined with a vastly more mature crypto landscape could place him in a position that demands stricter and more nuanced oversight.
Further Stock Market Fears
The resulting crash in early September, which coincided with El Salvador making Bitcoin legal tender, saw BTC fall to $43,700 before making a mild recovery above $48k. However, a spillover of uncertainty as the result of the Evergrande debt crunch today has sent BTC back down to $44,700.
This comes on top of fresh news that the Biden administration plans to ban the use of crypto as a means of facilitating ransomware payments. According to reports, this could even involve penalties for victim organizations that cooperate with ransomware attackers. Although, how exactly such a ban would be monitored and implemented is unclear at this time.