Binance’s native token falls sharply as regulatory concerns mount
By Ambar Warrick
Investing.com -- Binance's native token led losses among major cryptocurrencies on Tuesday amid fears of a U.S. crackdown against the exchange's affiliates, while fears of more regulatory scrutiny also weighed on broader cryptocurrency markets.
Binance’s BNB token slipped over 7% and was trading close to a one-month low. The token was trading down over 10% in the past seven days, as media reports showed that Paxos, a U.S. firm that issues tokens for the world’s largest crypto exchange, was the target of heavy regulatory scrutiny.
The Securities and Exchange Commission (SEC) this week flagged potential regulatory action against Paxos over its minting of the Binance USD (BUSD) stablecoin, calling it an unregistered security. The move came shortly after Paxos was ordered by the New York Department of Financial Services to stop minting BUSD tokens.
On-chain data showed that Binance was seeing a significant spike in withdrawals and BUSD redemptions after the move.
The regulatory action represents a significant headwind to Binance in capturing market share in the highly-lucrative stablecoin space. But it also comes amid a U.S. Department of Justice investigation into Binance over potential money laundering and sanctions violations, as well as increased regulatory scrutiny of the exchange’s U.S. banking partners.
Binance had recently suspended dollar deposits and withdrawals for all international customers.
In addition to the action against Binance, the SEC was also scrutinizing crypto-staking services. The commission reached a settlement with Kraken to shut down the exchange’s staking service, which triggered fears that other major players, particularly Coinbase Global Inc (NASDAQ: COIN ) and Binance U.S., could be targeted next.
Fears of more regulatory action spilled over into broader crypto markets, with Bitcoin down 0.4% on Tuesday and trading around three-week lows. Ethereum fell 1.1% and was also at levels last seen in early-January.
Caution ahead of key U.S. inflation data due later in the day also kept crypto markets subdued.
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