🔴 Banks Shock Crypto | This Week in Crypto – March 13, 2023
The crypto market goes wild after a banking collapse, causing the USDC to decline against the dollar and raising concerns about the future of the entire sector. Will crypto survive the domino effect? These stories and more this week in crypto.
Bitcoin falls below $20,000, billions wiped out
Bitcoin’s price fell below $20,000, marking a two-month low, as $70 billion was wiped off the broader crypto market in 24 hours. The selloff came with the broader downward move in U.S. tech stocks after crypto-linked Silicon Valley Bank was shut down by regulators, causing a ripple effect throughout markets.
Big fallout for USDC after bank collapse
Circle’s normally reliable USDC stablecoin fell below $1 as the firm revealed it has over $3 billion in USD coin reserves at the collapsed Silicon Valley Bank. Other stablecoin prices were also decoupled from the dollar, and Ethereum gas fees rose as investors rushed to quickly reallocate their money in a bank run, after regulators shut down the failed bank.
Ether is marked as a security
Ether also fell to its lowest price in two months, after the New York attorney general labeled it a ‘collateral’ in the state’s lawsuit against crypto exchange KuCoin, fueling fears of a broader regulatory effort. KuCoin is facing charges for failing to register with the government before facilitating transactions on the platform.
Kraken is ready to launch a new bank
San Francisco-based cryptocurrency exchange Kraken is reportedly closer to launching its own bank in the US. Kraken already has approval from a state regulator in Wyoming that allows Kraken to operate as an independent bank, which will reduce its reliance on third-party financial institutions. Kraken’s head of legal affairs confirmed that they may launch their own bank “very, very soon.”
Coinbase continues its staking services
The US crypto exchange Coinbase has renewed its position that betting services will continue. Despite the SEC looking to crack down on alleged unregistered securities offerings via 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, has announced the suspension of USD deposits via bank transfers until further notice, due to “service disruption from the endpoint processing partner”. The processing partner was not named, but the shutdown came shortly after crypto bank Silvergate revealed plans to wind down its crypto payment network.
US Proposes 30% Tax on Electricity for Crypto Miners
A budget proposal presented by President Biden seeks to reduce mining activity in the United States by imposing a tax on energy used by crypto miners. The Ministry of Finance explained that any company using electrical resources will be subject to a tax of 30% of the cost of electricity used in digital asset mining.
BitMex Co-Founder Proposes Bitcoin-Based Stablecoin
Arthur Hayes, co-founder of crypto trading platform BitMEX, has proposed a new type of stablecoin, called NakaDollar (NUSD), which will be backed by bitcoin and perpetual exchange derivatives. Hayes notes in a blog post explaining the idea that, unlike a majority of pre-existing stablecoins, such as Tether or USDC, NakaDollar will be created without the traditional banking system, making it exempt from fiat regulations.
That’s what happened this week in crypto, see you next week.
