Cryptocurrency prices were mixed Monday as investors reacted to renewed covid restrictions in China and concern about U.S. economic growth.
Bitcoin was down 2% to $38,815 at last check, according to CoinGecko. Ethereum was off 2.6% to $2,859, while dogecoin was up nearly 5% to $0.139650.
'A Steady Downfall'
"Bitcoin has been on a steady downfall, nesting below the $40k mark today at $38k with a less than promising outlook," said Keegan Francis, bitcoin and cryptocurrency specialist with Finder.
"The drop comes after Federal Reserve Chairman Jerome Powell pointed at the possibility of the central bank raising interest rates by a half percentage point."
Francis said that despite declining prices, "bitcoins on chain metrics point to a supply shock in the near future."
"Similar setups in the past have led to a rally, but amid global economic uncertainty, the price of bitcoin and wider markets could go either way," he added.
Meanwhile, U.S. regulators have been taking steps against Russia in response to its invasion of Ukraine.
Last week, the U.S. Treasury Department for the first time levied sanctions on a cryptocurrency mining company.
'Exodus of Miners'
The company — a Russian bitcoin-mining firm named BitRiver — was put on the Treasury Department's Office of Foreign Asset Control.
Winston Ma, managing partner of CloudTree Ventures and author of "The Digital War – How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace," said U.S. sanctions may cripple Russia’s multibillion-dollar crypto industry and disrupt the global crypto markets.
Ma said the department took the action "because Russia may monetize its vast oil reserves with power-intensive crypto mining to raise funds and get around western sanctions."
Ma added that this was not surprising, "given that soon after the Russia-Ukraine war broke out, Treasury Secretary Janet Yellen announced that U.S .would monitor cryptocurrencies as a channel for Russia to evade sanctions from the U.S. and Western nations."
"There could end up being an exodus of miners from Russia and creating a disruption to global hash power and crypto mining, like China’s 2021 crypto crackdown did," he said.
'Going Beyond its Authority'
Closer to home, David Lesperance, managing partner of immigration and tax adviser at Lesperance & Associates, said crypto exchanges have been making a lobbying effort to prefer the Federal Trade Commission over the Securities and Exchange Commission in regulating cryptocurrencies.
This became more open, he said, when Paul Grewal, chief legal officer for Coinbase (COIN) , challenged the SEC over its proposal to update its definition of an exchange, saying the commission is "going beyond its authority."
Lesperance said the January SEC proposal expands the definition of an exchange to include "systems that offer the use of non-firm trading interest and communications protocols to bring together buyers and sellers of securities."
"Since being announced, crypto exchanges have been lobbying to have it amended," he said. "They are challenging SEC Chair Gary Gensler’s position that it was necessary in a modern world to update 'the definition of an exchange' to cover platforms for all kinds of asset classes that bring together buyers and sellers."
'Rules of the Road'
"Gotta say at the outset: this needs to be an open and transparent process," Grewal said in a recent tweet. "As I’ve said it before: these decisions are too important to be made in a black box."
Grewal added that "the proposed definition is so broad that it could potentially encompass several types of systems that are in no way 'generally understood' to perform the functions of a stock exchange."
"That’s why the SEC needs to be precise when altering definitions going forward. It should provide clear guidance to the market as to how its rules will be applied in order to meet its obligations under administrative law," Grewal said.
Lesperance said that "clearly the recent White House executive order for the FTC and SEC to come to a rapid agreement on regulatory jurisdiction is needed to clear the air and provide the industry with the rules of the road.”
