Bitcoin rises amid market jitters as Paxos stablecoin next regulator target after Kraken – Crypto News – Crypto News
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Bitcoin rises amid market jitters as Paxos stablecoin next regulator target after Kraken – Crypto News

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Bitcoin was the only top 10 non-stablecoin cryptocurrency to gain in Tuesday morning trading in Asia in a market unsettled by regulators in the US targeting digital asset companies. Paxos Trust Co. was ordered on Monday to stop issuing its US dollar-pegged Binance USD (BUSD) stablecoin by New York authorities and it reportedly faces an SEC investigation. BNB, the native currency of Binance the world’s largest crypto exchange, had the biggest drop on the list.

See related articles: Paxos ordered to stop issuing Binance USD stablecoin: report

Fast facts

  • Bitcoin rose 0.1% in the past 24 hours to US$21,800 at 8 am in Hong Kong, but is down 4.2% over the past seven days, according to CoinMarketCap, Ether dropped 0.56 to US$1,506, posting a 6.8% weekly loss.
  • BNB fell 5.9% to US$294.40, bringing weekly losses to 9.3%.
  • The New York Department of Financial Services ordered Paxos to stop issuing the BUSD stablecoin and the company received notice from the US Securities and Exchange Commission that it may face an investigation as the regulator regards BUSD as an unregistered security, according to a Monday press release,
  • “Paxos categorically disagrees with the SEC staff because BUSD is not a security under the federal securities laws,” the firm said in the release.
  • A stablecoin is a crypto token pegged to the value of an asset, in this case the US dollar, and collateralized by the underlying asset. BUSD was co-developed by Paxos and the Binance exchange. The Ethereum-based stablecoin is issued and managed by Paxos.
  • Paxos said the BUSD it issues is fully backed with US dollar-denominated reserves and is fully segregated. Paxos reported about $16 billion in collateral backing BUSD as of Jan. 31.
  • The moves on Paxos by regulators follow the SEC slapping a US$30 million fine on the Kraken US-based crypto exchange last week for what it called the illegal operation of a crypto staking program.
  • The actions by regulators unnerved some investors, with Polygon dropping 4.3% to trade at US$1.19, a loss of 0.3% for the past week. Solana fell 3.3% to US$20.78, a weekly loss of 8.4%.
  • US equities rose on Monday. The Dow Jones Industrial Average and the S&P 500 Index both gained 1.1% while the Nasdaq Composite Index closed the day 1.4% higher.
  • The gains come ahead of Tuesday’s release of the US Consumer Price Index (CPI) for January, a key measure of inflation that the Federal Reserve uses to set interest rates. Economists expect a 0.4% increase in the CPI for January to December, however, the year-on-year pace is slowing.
  • The CPI in December showed prices rose 6.5% year-on-year from the 7.1% recorded in November, which in turn declined from October’s 7.7% and 8.2% in September.
  • The Fed, which has said it wants inflation back in the 2% range, has raised interest rates multiple times since last March to reverse the inflation surge. Analysts at the CME Group predict a more than 90% chance that the Fed will raise rates by a further 25 basis points at its meeting next month. US 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%.

See related articles: UAE central bank to issue CBDC, promote digital asset growth

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