Distributed Ledger: Crypto regulation looms, but bitcoin rallies. Here’s why  

by | Feb 16, 2023 | Stock Market

Hello! Welcome back to Distributed Ledger. This is Frances Yue, crypto reporter at MarketWatch. U.S. regulators have been doubling down on efforts to increase oversight of the crypto industry. Over the past few days, the U.S. Securities and Exchange Commission shut down crypto exchange Kraken’s staking program, issued a Wells notice to warn stablecoin issuer Paxos it could face an enforcement action, and proposed a rule that could make it harder for many asset managers to invest client money in digital assets.

Still, bitcoin posted a major rally since Wednesday, up more than 14% to trade above $25,000 briefly Thursday, at the highest level since June, according to CoinDesk data. Several other major cryptocurrencies also went up, with ether reaching as high as $1,740 on Thursday, the loftiest level since September. In this installment, I caught up with a few industry participants to help explain potential reasons for the rally. And as always, find me on Twitter at @FrancesYue_ to share any thoughts on crypto, this newsletter, or your personal stories with digital assets. Why crypto surged? “I don’t see any fundamental reason for the strength in crypto asset prices” over the past two days, said David Tawil, president and co-founder at ProChain Capital. It might be the crypto ecosystem’s way of telling the SEC “do what you will, we’ll keep doing what we’re doing,” Tawil said.  Still, recent actions by U.S. regulators could have been worse, particularly after the collapse of crypto exchange FTX in November resulted in billions of dollars in customer losses, said Ian Weisberger, co-founder at CoinRoutes. “It would have been 10 times worse had the SEC come out and ask Coinbase to delist all these c …

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