Regulators Crack Down on Digital Assets, Causing Outflows of $32M

SEC's ‘War on Crypto’ Results In Massive Digital Asset Outflows

As the Securities and Exchange Commission intensifies what industry analysts have dubbed its war on crypto, the outflow follows a massive U.S. crackdown on the digital asset industry that has targeted stablecoins, staking services, and crypto custody.

CoinShares analyst James Butterfill added that outflows reached $62 million in the middle of last week but slowed down by the end of the week as sentiment improved. Institutional investors returned to crypto funds, injecting $117 million in the final week of the month, a six-month high.

However, after four weeks of inflows in January, funds have been flowing out for the past two weeks.

Crypto Companies Face SEC’s Heat

The SEC's charges against Kraken for its staking services on February 9 comprise the regulatory enforcement action that is responsible for the sentiment shift. A few days later, it filed a lawsuit against Paxos for minting Binance USD (BUSD), and last week, it also proposed changes for crypto firms that serve as custodians.