- The rigid crypto regulations have heavily impacted the crypto space.
- The SEC-Paxos lawsuit has created fear among the crypto community.
- The prices of the leading cryptocurrencies gradually rose by 1% from the previous days’ prices.
According to recent expositions, the non-adhesive crypto regulations administered by the US authorities had heavily impacted the digital sector. In specific, the SEC-Paxos Lawsuit pushed the community to be immersed in the fear of a volatile market, resulting from a “shaken confidence”.
On February 12, the Securities and Exchange Commission (SEC) issued a Wells Notice to the crypto platform Paxos Trust Company, alleging that the fiat-backed stablecoin Binance USD (BUSD) issued by the company is an unregistered security.
Significantly, the move has largely affected both the stablecoin and Binance, the largest crypto exchange that supports it. The report claimed that the crypto community is fearful about the inflations the crypto space could witness; the turmoil caused by the fall of the exchange FTX is still a nightmare.
Notably, Hayden Hughes, the Chief Executive Officer of the social trading platform Alpha Impact, told that the SEC’s decision to end the issuance of BUSD has “shaken confidence in the Binance ecosystem”.
Sheena Shah, Strategist at the American multinational investment management company Morgan Stanley commented that “falling stablecoin market capitalization means falling crypto liquidity and leverage”:
Without new BUSD being created by Paxos, we need to assess whether current holders of BUSD will convert to other stablecoins, having a neutral impact on liquidity, or if concerns over further regulatory actions will reduce overall market demand for stablecoins.
Nonetheless, the index of the largest 100 tokens added about 1%, slightly marking a return from the previous day’s fall. The prices of the leading cryptocurrencies including Bitcoin and Ether also rose by less than 1%, with the current prices at $21,715 and $1500 respectively.
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