© Reuters
By Ambar Warrick
Investing.com — Binance’s native token led losses among major cryptocurrencies on Tuesday, amid fears of a U.S. crackdown on exchange affiliates, while fears of greater regulatory scrutiny swelled. also weighed in on the broader cryptocurrency markets.
Binance’s token fell more than 7% and traded near its 1-month low. The token has traded down more than 10% in the past seven days as media reports showed that Paxos, a US-based company that issues tokens for the world’s largest cryptocurrency exchange, was the subject to intense regulatory scrutiny.
This week, the Securities and Exchange Commission (SEC) condemned Paxos for minting the stablecoin (BUSD), calling it an unregistered security. This move was made shortly after the New York Department of Financial Services ordered Paxos to stop minting BUSD tokens.
On-chain data showed that Binance experienced a significant spike in BUSD withdrawals and redemptions after this move.
This regulatory move represents a significant hurdle for Binance in its bid to capture market share in the highly lucrative stablecoin industry. But it also comes amid a US Department of Justice investigation of Binance over potential sanctions and money laundering violations, as well as increased regulatory scrutiny of the exchange’s US banking partners.
Binance had recently suspended dollar deposits and withdrawals for all international customers.
In addition to the action against Binance, the SEC has also taken a close look at crypto-staking services. It struck a deal with Kraken to shut down the exchange’s staking service, which raised concerns that other major players including Coinbase Global Inc (NASDAQ:) and Binance US, are the next targets.
Fears of further regulatory action spilled over into the broader crypto markets, with it falling 0.4% on Tuesday and trading around three-week lows. fell 1.1% and is also at levels not seen since early January.
Cautiousness ahead of the release of key data on the, due later in the day, also kept cryptocurrency markets on edge.