Two Republican lawmakers who are central to the ongoing efforts of the U.S. Congress to regulate cryptocurrencies are questioning government policies that control how financial firms record cryptocurrencies. U.S. Representative Patrick McHenry (R-N.C.), Chairman of the House Financial Services Committee and Senator. Cynthia Lummis (R-Wyo.), who is the author of cryptocurrency legislation, on Thursday sent a letter to several banking agencies asking how they are dealing with a controversial Securities and Exchange Commission bulletin that recommends that financial institutions hold customers’ crypto assets on their balance sheets.
The letter to the Federal Reserve and other U.S. banking institutions criticized the SEC’s move last year, known as Staff Records Bulletin 121, as a measure that could “deprive millions of Americans of access to safe and secure mechanisms for holding digital assets” as it would force regulated banks to reject holding cryptocurrencies. how is it related to large capital requirements. To put it bluntly: “The recent Celsius bankruptcy ruling, which classified all Celsius clients as unsecured creditors and therefore placed them at the back of the queue to recover their assets, highlights the legal risk of effectively forcing clients to place assets on the balance sheet,” lawmakers argued in his letter. The letter asked the banking agencies what interactions they had with the SEC on the matter and whether the position of the securities regulator conflicted with their own policies.
Bitcoin is down 3.22% in the last 24 hours, to $22,827 as of 12:30 p.m. Hong Kong, according to CoinMarketCap data, extending the weekly drop to 4.78%, according to CoinMarketCap data. The price of Bitcoin (BTC) fell over 5% from $23,500 to $22,240 in just 60 minutes amid a wave of uncertainty over crypto-friendly bank Silvergate Capital. According to Cointelegraph Markets Pro, the price drop wiped out $22 billion of Bitcoin’s total market capitalization, which is now $430.9 billion.
Eth (ETH), XRP (XRP), Cardano (ADA) and Polygon (MATIC), as well as other non-Bitcoin cryptocurrencies, experienced the same drastic decline. Ether (ETH) also fell 4.74%, from $1,644 to $1,566, dropping its market cap by $9 billion in the first hour for a seven-day drop of 3.33%. Later in the morning in Asia, both tokens (bitcoin and ether) fell by as much as 5%. Despite the decline, both are still up about 40% in the year to date. Polkadot topped the list of losers among the top cryptocurrencies, dropping 6.00% to $6.08 and shedding 14.63% over the past seven days. The token has been in a downtrend for two weeks, although the Polkadot community remains active, leading daily development on Github, according to ProofofGithub’s Github tracker on Thursday.
For the first time in nearly two years, BUSD’s market capitalization has fallen below $10 billion amid tightening regulatory action against a token issuer in the United States and a planned delisting of a major crypto exchange. BUSD’s capitalization has plummeted, by almost $14 billion, since its all-time high market capitalization of $23.49 billion, which it reached on Nov. 15, just days after FTX’s shock crash. As of March 3, the stablecoin’s market capitalization has fallen to $9.66 billion, a level not seen since June 29, 2021.
Most recently, BUSD was the subject of a potential lawsuit against Paxos by the U.S. Securities and Exchange Commission on February 12 for possible violations of investor protection laws. Since then, the market capitalization of BUSD has shrunk by $6.65 billion. The New York Financial Services District also ordered Paxos to stop minting and issuing BUSD on Feb. 12, which likely contributed to the stablecoin’s market cap drop. Earlier this week, cryptocurrency exchange Coinbase announced that it would delist BUSD from its exchange on March 13 as the stablecoin “no longer meets our listing standards,” a Coinbase spokesperson told Cointelegraph.
The broader crypto market is also seeing a drop in market capitalization, with many pointing to the recent controversy surrounding Silvergate Bank due to the late filing of its 10-K annual financial report on March 1. A plethora of crypto exchanges and platforms have severed ties with the bank. Currently, Silvergate Capital Corp shares are in free fall. In addition to closing the trading session on Thursday with a loss of 2.773%, today it is down almost 30% in the pre-market. The loss of investor confidence was due to the company’s failure to file Form 10-K for the previous fiscal year. Silvergate said Thursday in a filing with the US Securities and Exchange Commission (SEC) that the company is still assessing “its ability to continue as a going concern,” which caused its share price to drop more than 50%. Analysts see this excuse as unhealthy, a signal that something may be out of balance on the firm’s books. However, this fact should not come as a surprise as Silvergate Bank had a strong working relationship with FTX. The firm explained that its relationship is limited to deposits, but because of the scrutiny of regulators, discomfort among investors is growing.
Silvergate Bank now plays a vital role in the broader digital asset ecosystem and serves as the primary regulated banking partner for hundreds of crypto entities in North America and around the world. The firm’s business is also dependent on lending, having provided a $205 million line of credit to Michael Saylor’s business intelligence firm MicroStrategy Incorporated to buy bitcoin. Related loan products have also been launched in partnership with Fidelity Investments, one of the largest asset managers in the US. To allay the fears of its investors, Silvergate should publish its financial statements as soon as possible.
The total capitalization of the crypto market has fallen by 1.02% over the past 24 hours to $1.07 trillion. And the total trading volume over the past 24 hours has decreased by 12.30% to $42.65 billion. US stocks closed higher on Thursday. The Dow Jones Industrial Average rose 1.05%, the S&P500 rose 0.76% and the Nasdaq Composite rose to 0.73%.
Atlanta Fed President Rafael Bostic said Thursday that he supports a 25 basis point rate hike in March, allaying some recent fears that the Fed could raise 50 basis points. This helped stocks move higher, but the market got into cross-flows as Fed chief Christopher Waller said the same day that the latest data showed that the fight against inflation was far from over. US Department of Labor data on Thursday showed that initial jobless claims fell in the week ended Feb. 25, while labor costs rose, indicating that inflation has not yet been tamed by the Fed’s hike in interest rates. Friday is expected data from the US services sector, and on the same day, several other Fed officials will speak, which could further amplify the mixed messages for the markets. Separately, China will begin its so-called “Two Sessions” this weekend, the most important political meeting of the year to determine economic policy in the world’s second largest economy.
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