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Bitcoin drops as US plans to sell over 41,000 BTC

Representations of cryptocurrency Bitcoin are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration
Bitcoin's price has risen by 67.76% so far this year. Photo: Dado Ruvic/Reuters (Dado Ruvic / reuters)

Bitcoin (BTC-USD) has fallen below $28,000 (£22,730) as regulatory action against the crypto industry intensifies and the US government announces a schedule to sell 41,490 BTC in 2023.

The global cryptocurrency market cap stood at $1.21tn on Monday, a drop of 2.1%, according to Coingecko.

Bitcoin fell 2.2% to $27,887.

The recent price action has left bitcoin's market capitalisation at $538bn. But, bitcoin's price has risen by 67.76% so far this year.

Ethereum (ETH-USD) fell 1.27% to $1,790.

Read more: Crypto live prices

The Ethereum Foundation said last week that the blockchain's Shanghai hard fork, featuring an upgrade enabling investors to withdraw their staked ETH for the first time, is set for 12 April.

US to sell over 41,000 bitcoin

Last month, the US government sold $216m worth of bitcoin that it had seized during a November 2021 search connected to cryptocurrency that had been stolen from the Silk Road dark web marketplace.

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The bitcoin sold was a portion of a 50,000 BTC haul that was seized following the arrest of James Zhong, who pleaded guilty to wire fraud after the government alleged he manipulated the transaction system on Silk Road in 2012.

The US government plans to sell the remaining 41,490 bitcoins in four separate portions throughout 2023, according to a court filing.

Ripple versus the SEC

XRP (XRP-USD) climbed 3.06% to $0.5192 — a 15.57% weekly increase.

It is thought that Ripple Labs, whose crypto payment platform utilises XRP, will soon resolve its ongoing legal battle with the US Securities and Exchange Commission (SEC).

The SEC has accused the company and its executives of violating securities regulations.

SEC chair Gary Gensler asked Congress for $2.4bn in funding last Wednesday to enhance the agency's efforts in combating cryptocurrency-related malpractices.

Binance versus the CFTC

The cryptocurrency market has experienced instability due to last week's litigation from US regulators against crypto exchange Binance.

Last Monday, the US Commodities Futures Trading Commission (CFTC) filed an enforcement action against Binance and its founder Changpeng 'CZ' Zhao.

According to the CFTC, which has been investigating Binance’s business since 2021, the company failed to meet its regulatory obligations by not properly registering with the derivatives regulator.

The CFTC classifies bitcoin (BTC-USD), ethereum (ETH-USD) and litecoin (LTC-USD) as commodities and has accused Binance of conducting unregistered derivative trading with these digital assets.

Read more: Binance: Investors withdraw more than $2bn after enforcement action by US regulators

Binance founder Changpeng “CZ” Zhao has also been accused of encouraging Americans to “evade compliance controls” by the US regulator.

UK banks restricting web3 firms, claims report

The UK cryptocurrency sector is finding it increasingly difficult to access banking services, with restrictions on web3 firms holding back Britain's aspiration to become a "global crypto hub", a new report has claimed.

The few banks that continue to collaborate with web3 businesses are requiring more extensive documentation, with problems ranging from having applications rejected to getting buried in paperwork, according to the report by Bloomberg.

Web3 firm SavingBlocks said it applied to nine banking service providers for a corporate account and was turned down by seven of them. Those that did offer services asked for "insurmountable" additional documentation.

“There aren’t many options available, most traditional banks won’t offer banking services to crypto firms," Edouard Daunizeau, SavingBlocks founder and CEO, told Bloomberg.

“With the recent string of events it will be even tougher, so we are now seeking licenses in France where we think it will be easier."

Read more: Crypto live prices

Some web3 founders have complained to the UK government, saying that the limitations contradict prime minister Rishi Sunak's intention to prioritise financial technology innovation and establish the UK as a global crypto hub.

“The UK banking reaction has been more acute than the EU one," Tom Duff-Gordon, vice president of international policy at Coinbase (COIN), told Bloomberg. He said that the European Union's efforts to create a digital asset framework make banks in other countries more open to working with crypto firms.

The European parliamentary committee approved the Markets in Crypto Assets (MiCA) legislation in October, with the final vote set to take place this month.

The UK is losing ground to the rest of Europe, according to the Bloomberg report, as data from PitchBook showed venture capital funding for UK digital asset companies has experienced a 94% decline over the past year.

The EU saw a 31% increase in investments during the same period.

Equity markets

US stocks advanced on Friday, as the Federal Reserve's preferred inflation measure indicated signs of cooling, and a potential end to the Fed's monetary tightening cycle.

The tech-heavy Nasdaq (^IXIC) increased by 1.7%, while the S&P 500 (^GSPC) and the Dow Jones Industrial Average (^DJI) gained 1.2% and 1.4%, respectively.

Watch: Polygon to 'overtake Ethereum in terms of economic activity,' claims co-founder | The Crypto Mile

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