Both Bitcoin and Ether fell in Wednesday afternoon trade in Asia, with Ripple’s XRP leading losses among the other top 10 non-stablecoin cryptocurrencies. Other tokens in the top 10 traded mixed, with crypto exchange Binance’s BNB token leading the gains amid its ongoing lawsuit with the U.S. Securities and Exchange Commission (SEC). Investors are looking forward to the U.S. central bank’s decision on interest rates to be announced later on Wednesday, with the Federal Reserve expected to keep rates unchanged at 5%-5.25%.
See related article: How American courts have become central to crypto law
XRP leads losses, BNB gains
Bitcoin fell 0.69% to US$25,894 in the 24 hours to 4 p.m. in Hong Kong, according to CoinMarketCap data. The world’s biggest cryptocurrency by market capitalization has lost 3.40% in the past week following lawsuits brought by U.S. regulators against two of the world’s biggest crypto exchanges, Binance and Coinbase.
Ether, the world’s second biggest cryptocurrency, fell 0.42% to US$1,741 over the past 24 hours, bringing its weekly losses to 7.18%.
“Last week and the weekend were tumultuous days for cryptocurrency markets, marked by significant declines in valuations across the board,” Robert Quartly-Janeiro, Chief Strategy Officer of crypto exchange Bitrue, said in an emailed statement.
“The challenges faced by Binance and Coinbase in the United States hold significant weight. Binance, commanding over 60% of the global market, and Coinbase, with 70% market share in the USA, are major participants so what happens to them naturally affects global sentiment,” Quartly-Janeiro added.
BNB, the native token of the world’s largest crypto exchange Binance, gained 4.93% to US$246 over the past 24 hours. That reduced its weekly losses to 10.95%.
The gains came after a U.S. federal judge on Tuesday denied the SEC’s request to freeze the assets of Binance.US. The decision allows Binance.US to continue operating while it battles a lawsuit filed against it by the regulator last week. The SEC alleges that Binance.US failed to register as a securities exchange while offering and selling unregistered securities.
The SEC also sued Coinbase, the largest crypto exchange in the U.S., on similar charges.
“Outflows from Coinbase and Binance reached US$4 billion during the week. Crypto traders, spooked by SEC lawsuits, are withdrawing assets from exchanges en masse,” Alex Kuptsikevich, senior market analyst at online brokerage firm FxPro, said in emailed comments.
In a parallel development involving the SEC and crypto, Ripple’s XRP token was the biggest loser, dropping 5.36% to US$0.5013 in 24 hours and 4.93% on the week. The drop came after the so-called “Hinman documents” were released, named after former SEC corporate finance director William Hinman.
Ripple Labs Inc. was sued by the SEC in December 2020, for allegedly selling US$1.3 billion in unregistered securities. The company asked to unseal documents in which Hinman said Bitcoin and Ether should not be categorized as financial securities. The comments are a major point of contention in the legal battle between the SEC and Ripple as Ripple seeks to bolster its fair notice defense.
Ripple’s chief legal officer Stuart Alderoty tweeted on Tuesday, “Hinman’s speech should never again be invoked in any serious discussion about whether a token is or is not a security. Unelected bureaucrats must faithfully apply the law within the constraints of their jurisdiction.”
14/ And finally, Hinman’s speech should never again be invoked in any serious discussion about whether a token is or is not a security. Unelected bureaucrats must faithfully apply the law within the constraints of their jurisdiction. They can’t – as Hinman tried – create new law.
— Stuart Alderoty (@s_alderoty) June 13, 2023
Markus Thielen, Head of Research & Strategy at digital asset service platform Matrixport, feels that the crypto crackdown by the U.S. SEC opens up new opportunities for other parts of the world including Asia.
“I think the key difference is that in the U.S., derivatives are not really offered; only the spot market. And the derivatives market is 11 times bigger than the spot market,” Thielen told Bloomberg on June 13.
“So a lot of the trading already happens outside of the U.S. and I think this is why Binance got into trouble because a lot of U.S. institutions appear to be trading on the platform according to the allegations. I think to really offset the pressure from the U.S., I think Hong Kong needs to do more and I think Hong Kong can actually step into this void now,” Thielen added.
Even in the decentralized finance (DeFi) sector, which gained momentum after multiple centralized finance (CeFi) collapses throughout 2022, institutional investors are looking at Asia and the Middle East.
“Growth is returning to DeFi, albeit slower than last year, but interest is coming back as institutions and investors evaluate the landscape,” Robert Alcorn, chief executive and Co-Founder of DeFi credit marketplace Clearpool, said in a statement.
“Indeed, the main obstacle for traditional institutions remains regulatory clarity and compliance. Significant progress has been made in this regard across Asia and the Middle East, which is likely to encourage investor participation, and we expect these regions to become the main crypto lending hubs as confidence builds,” Alcorn added.
The global crypto market fell 0.46% to US$1.06 trillion, while total market volume gained 8.59% to US$31.3 billion in the last 24 hours.
