The Securities and Exchange Commission’s (SEC) action against US-based crypto exchange Kraken is expected to have a wider impact on the industry, experts told Business Standard. On Thursday, SEC said most staking platforms fail to provide proper disclosures and imposed a $30 million fine on Kraken.
Later, Kraken announced that it would end its staking service and pay the fine.
Under staking, investors lock their crypto assets for a set period, allowing various market participants to use the underlying Blockchain technology. In return, they are offered additional crypto assets as a reward.
Following the SEC order, the crypto industry saw massive sellout, with Bitcoin falling nearly 4 per cent and Ethereum declining over 5 per cent in the last 24 hours. Coinbase Global Inc shares, another exchange offering staking service, fell the most in more than six months.
“This occurrence will have a ripple effect on the overall cryptocurrency market and its various sub-sectors and offerings,” said Anurag Dixit, founder of the crypto platform Kunji.
In the last seven days, Bitcoin has fallen 7 per cent and was trading at $21,804 on Friday. Ethereum was down over 6.5 per cent and was at $1,540. But the total market cap has managed to stay above $1 trillion.
“Crucially, Bitcoin’s market capitalisation has fallen below 40 per cent, and positive price action seems to be moving toward altcoins and thematic plays,” said Parth Chaturvedi, crypto ecosystem lead of crypto exchange CoinSwitch.
The market is expected to stay volatile in the coming week.
“We can expect the volatility to continue over the weekend,” said Alankar Saxena, CTO and co-founder of crypto asset management firm Mudrex.
“Numerous data releases are scheduled for the coming week, the market’s high volatility is expected to persist,” Dixit said.