Traditional weekly roundup from PointPay! In the PointPay Crypto Digest we collect the most interesting and important news of the past week and share them with you.
This time the focus is on the SEC of the United States. With each passing week, the SEC becomes more and more aggressive in its regulation as well as new proceedings, which has started to take its toll.
Besides, Elon Musk, as usual, raised the value of several cryptocurrencies in a couple of tweets. On the other hand, the main cryptocurrency, bitcoin, tested the $25,000 level, which provided a boost for other altcoins from top-10.
More on this later in the article!
Bitcoin tests $25,000 level
Bitcoin broke through the $25,000 mark on the morning of February 16. After that, BTC traded near this level throughout the week.
Due to the growth of the main cryptocurrency, all the other currencies in the market, which are included in the top 10, closed the week in the green sector. At the same time, the total cap of the cryptocurrency market reached approximately $1.16 trillion.
NYDFS, SEC and BUSD
Paxos (an infrastructure company) was the subject of an investigation by the New York State Department of Financial Services (NYDFS). As part of the investigation, Paxos was prohibited from issuing BUSD stablecoins.
Paxos was forced to stop issuing Binance's stablecoin and also suspended cooperation between the companies. It is reported that support for BUSD will continue through redemption and conversion until at least 2024.
The reason for the ban, according to the NYDFS, was Paxos' violation of its obligations. Paxos was required to conduct individual reviews and due diligence updates to prevent the coin from being used by fraudsters, but neglected to do so.
After the BUSD was banned, the SEC got involved. The SEC alleges that the BUSD is an unregistered security. According to the information received, the SEC intends to file a lawsuit.
Such news affected Binance's plans as well as the price of the platform's tokens. BNB lost about 10% of its price after the news, falling below $300. In the following AMA session, CZ reported about Binance's plans to drop BUSD as the main pair, as its supply will now only decrease until it does not reach 0.
Also, the head of Binance announced the introduction of other stablecoins on the platform. It was emphasized that some of them will be pegged to currencies other than the US dollar. In addition, CZ predicted a gradual exodus of cryptocurrency companies from the US due to government pressure.
Reportedly, Binance Holdings is already winding down its investment programs in the US, withdrawing funds with the intention of leaving the market.
How BUSD's problems affect other stablecoins and USDT
BUSD's problems indirectly affect other stablecoins that are pegged to the US dollar and issued domestically. If the SEC sues BUSD and declares it a security, it will set a precedent where other stablecoins will likely be considered securities as well.
There was also a rumor online that the complaint against Paxos was originally filed by Circle (USDC). However, during the AMA session CZ called these rumors implausible. The head of Binance believes that Circle would not do so, as USDC also falls under the focus of regulators.
Only stablecoin USDT was positively affected by the events. While BUSD and USDC lost several billion in capitalization, USDT increased its influence. Some community members believe that the SEC wants to eliminate USDT's "competitors" and that's why it is trying to force them to be regulated or to leave the USA.
Impact of SEC actions
Recently, the SEC and other authorities have been actively trying to regulate cryptocurrencies and companies operating in this sector. However, in the absence of clear laws regarding the new entity and the fullness of powers, the current regulation is proving to be excessively "harsh", which negatively affects businesses.
In his AMA session, the head of Binance predicted that business will gradually begin to leave the US and migrate to countries that already have clearer regulation and a loyal government that intends to develop in this sphere. CZ believes that Dubai, Singapore, Hong Kong and the European Union are the main places where crypto companies will concentrate.
Binance Holdings is already exploring options to leave the US market and has suspended its investment activities. Also, a recent incident occurred in which the Kraken exchange was forced to leave the US market and pay a fine of $30 million.
NFT overloads bitcoin network
The Ordinals protocol was implemented in the Bitcoin network at the end of January. After the protocol was introduced, the Bitcoin network began supporting the creation of NFTs, which are assigned to a specific Satoshi (one hundred millionth of a BTC). Furthermore, the size of a single block was increased to 4MB.
The change attracted a lot of interest, and people began actively uploading copies of existing NFTs, audio files, and just plain images to the network. By mid-February, there were about 120,000 NFTs on the blockchain.
As a result, NFTs caused an increased load on the network and filled the meme. In addition, the average block size on the blockchain increased from 1.5MB to 3.5MB. Users faced higher fees and delays, while miners began to earn more.
Elon Musk raises the price of several meme currencies in a series of tweets
Elon Musk, the owner of the social network Twitter and also widely known in the circles of the crypto community, once again decided to rock the price of meme currencies.
This time Elon published a series of posts in which he presented to the world a "new head of Twitter" - a Shiba inu dog named Floki. The dog was dressed in a sweatshirt and occupied the director's chair in the company's office.
As a result, several meme currencies had sharp reactions, namely:
- DOGE (over 7%)
- Shiba Inu (about 5%)
- FLOKI (over 40% in 24h)
Last week was marked by the actions of the US regulators, which affected the Binance exchange and halted the issuance of the BUSD stablecoin. USDC also suffered, which together with BUSD lost about $2 billion in capitalization.
The crypto business in the US is increasingly concerned about the lack of clear regulation and SEC actions. Many companies are starting to think about leaving the US market and moving their business to a better place.
In the AMA session, CZ named Dubai and Singapore as the most attractive jurisdictions today, offering clear regulation and many advantages for crypto companies. The European Union and Hong Kong were also mentioned as areas with a pro-cryptocurrency government and sufficient regulation.
Finally, Elon Musk once again rocked the prices of the DOGE and Shiba Inu meme tokens. FLOKI was also unexpectedly affected, increasing in value by 40% in 24 hours. All this was caused by photos of a shiba inu dog named Floki, who was introduced as a new director by Elon.
That's the end of last week's news. Come back next week for ongoing developments as well as new and important news that we will be gathered for you in the PointPay Crypto Digest.
See you next week!