Crypto markets chopped through the second quarter, receding from recent highs at the end of Q1 during the collapse of Silicon Valley Bank and ensuing banking crises before rebounding in June following the announcement of several US Bitcoin Spot ETF Filings by major issuers. Despite the whipsaw, global trading volumes remained historically muted while continual pressure from US regulators drives domestic movements.
Crypto markets chopped through the second quarter, receding from recent highs at the end of Q1 during the collapse of Silicon Valley Bank and ensuing banking crises before rebounding in June following the announcement of several US Bitcoin Spot ETF Filings by major issuers. Despite the whipsaw, global trading volumes remained historically muted while continual pressure from US regulators drives domestic movements.
In the United States, for much of the quarter, crypto fund managers were challenged with operation risks and regulatory uncertainty beginning with the absence of a proper banking settlement layer referred to many in the industry as “Operation Chokepoint 2.0”. What was once previously serviced by the SEN and Signet networks at Silvergate and Signature banks respectively, March’s banking disruptions created industry-wide issues for crypto funds and companies. Many crypto fund managers were forced to reassess and onboard additional banking partners for operational purposes and in unique instances, grow tokenized real-world asset exposures.
In North America, a pull-back in market-making activities from notable firms such as Jane Street & Jump Crypto compounded challenges. Gemini and Coinbase announced the launch of offshore derivatives exchanges, signaling more movement overseas by allowing eligible jurisdictions outside US markets the option to trade perpetual futures. Similarly, Binance announced its withdraw from the Canada citing the lack of guidance on stablecoins and investor limitations made the Canadian marketplace “no longer tenable.”
In the United States, regulatory headwinds were strong in April and June. The SEC moved to expand exchange regulation to DeFi platforms and later charged Bittrex for violating securities laws, which settled before moving its U.S. entity into bankruptcy. In May, the Federal Reserve Bank of New York blocked Circle’s USDC reserve fund from accessing the reverse-repurchasing program, preventing Circle from accessing the Fed’s facility. In early June, the SEC charged Binance and its CEO Changpeng Zhao (“CZ”) for alleging violations of securities laws. A day later, the SEC filed another lawsuit against Coinbase. Both announcements met with criticism from crypto-native firms. Regulatory clarity overseas has been a much different story.