The crypto market goes haywire following a bank collapse, causing USDC to split from the dollar and raising concerns about the future of the entire industry. Will Crypto Survive the Domino Effect? These stories and more this week in crypto.
Bitcoin falls below $20,000, billions wiped out
Bitcoin price fell below $20,000, marking a two-month low, as $70 billion was wiped out of the broader crypto market in the space of 24 hours. The selloff was accompanied by a broader downward move in US tech stocks after regulators shut down the crypto-linked Silicon Valley Bank, sending a ripple effect through markets.
Major fallout for USDC following bank collapse
Circle is normally reliable USDC stablecoin fell below its $1, as the company revealed it had over $3 billion in USD coin reserves at the collapsed Silicon Valley Bank. Other stablecoin prices also broke away from the dollar, and Ethereum gas fees soared as investors rushed to quickly reallocate their funds in a bank run, after regulators shut down the bank in bankruptcy.
Ether is labeled as a security
Ether also fell to its lowest price in two months after the New York attorney general called him a “safety” in the state’s lawsuit against crypto exchange KuCoin, fueling fears of a broader regulatory crackdown. KuCoin is facing charges for failing to register with the state before facilitating transactions on its platform.
Kraken is ready to launch a new bank
San Francisco-based cryptocurrency exchange Kraken is supposedly closer to launching his own bank in the United States. Kraken already has approval from a Wyoming state regulator that allows Kraken to operate an independent bank, which would reduce reliance on third-party financial institutions. Kraken’s chief legal officer has confirmed that they can launch their own bank “very, very soon”.
Coinbase continues staking services
American crypto exchange Coinbase To renewed its position that its staking services will continue. Although the SEC is seeking to clamp down on alleged offerings of unregistered securities through staking programs, Coinbase has reiterated that its staking services are here to stay. However, under the new terms, Coinbase explicitly explains that users earn rewards from the decentralized protocols, not directly from Coinbase.
Bybit suspends USD bank transfers
Bybit, one of the world’s leading crypto exchanges, announced the suspension of USD deposits by wire transfer until further notice, due to “endpoint processing partner service outages”. The processing partner was not named, but the shutdown came shortly after crypto bank Silvergate revealed plans to shut down its crypto payment network.
US Proposes 30% Electricity Tax for Crypto Miners
A budget proposal put forward by President Biden seeks to reduce mining activity in the United States by imposing a tax on the energy used by crypto miners. The Treasury Department explained that any company using electrical resources would be subject to a 30% tax on the costs of electricity used in the mining of digital assets.
BitMex co-founder offers Bitcoin-based stablecoin
Arthur Hayes, co-founder of crypto trading platform BitMEX, proposed a new type of stablecoin, called NakaDollar (NUSD), which would be backed by bitcoin and perpetual swap derivatives. Hayes notes in a blog post explaining the idea that, unlike a majority of already existing stablecoins, like Tether or USDC, NakaDollar would be created without the traditional banking system, making it free from fiat regulations.
That’s what happened this week in crypto, see you next week.