Due to the recent stricter US regulations and SEC crackdowns, digital asset investments are paying the price, which led to the biggest weekly outflow of 2023. Last week, reports came in on 20 Feb, that investors saw a whopping $32 million outflow – the biggest withdrawal from crypto funds since December 2022. Through the mid-week, things got even wilder when that outflow reached $62 million, but thankfully the markets calmed down by the end of the week, with more inflows and crypto prices resuming their upward trajectory.
Now, as for the ETP investors, it looks like you don’t have to feel too negative after all. Despite these fluctuations, Bitcoin prices rose by 10% over the week! This rally sent total assets under management (AuM) up to their highest level since August 2022 – a whopping $30 billion!
However, despite outflows of nearly $25 million, investment funds linked to Bitcoin fared badly. Conversely, short-Bitcoin investment products experienced inflows of $3.7 million, with year-to-date inflows totaling $38 million.
But overall, bitcoin had a fantastic week, with funds pushing into its wallet to the tune of $116 million. That brings this cryptocurrency’s year-to-date total net inflows to a whopping $158 million!
Noteworthy Crackdows That Led To This Outflow
Now, if you’re wondering what are the reasons for these outflows, we’ve got some for you. Last week, the NY Department of Financial Services decided that BUSD was an unregistered security and told some renowned crypto firms to stop minting it. And, if that wasn’t enough, the SEC then stepped in saying they were planning on taking the companies to court!
The SEC has labelled BUSD as an “unregistered security”, and is suing its issuer, Paxos.
But how on earth is a STABLECOIN considered a security, when it clearly doesn’t meet the Howey Test criteria.
— Miles Deutscher (@milesdeutscher) February 13, 2023
Furthermore, the SEC just reached an agreement with crypto exchange Kraken to put a stop to their staking services and programs in the country – and pay a hefty $30 million for their trouble. But wait – why the payout? Well, it turns out that Kraken had failed to register their staking-as-a-service program as securities with the commission, and the SEC decided it was time for the company to set things straight.