(Republicaninformer.com)- According to a report in the Wall Street Journal, federal regulators have begun restricting access to products and services that are critical in the cryptocurrency market.
Last week, regulators in New York stopped a new issuance of BUSD, one of the world’s largest stablecoins, which sent investors fleeing.
Additionally, Paxos Trust Co., the coin-issuing partner for Binance, is facing a lawsuit from the Securities and Exchange Commission (SEC). Just days earlier, Kraken’s parent company was fined $30 million by the SEC which forced it to stop offering a crypto-yield product to American investors.
According to the Wall Street Journal, banking regulators are also pressuring financial institutions to sever ties with cryptocurrency customers which would limit their ability to participate in the traditional financial system.
Some crypto experts note that this shift in tone began after the collapse of the cryptocurrency exchange FTX, which prompted elected officials and regulators to call for tougher enforcement of the crypto market.
As a result, crypto executives are expecting further investigations and regulatory lawsuits while skittish investors flee from potential targets, the Journal reported.
Banking regulators, meanwhile, are concerned about whether lending institutions can safely be involved in the crypto industry as some banks have already reduced their involvement in the cryptocurrency market.
Former regulator Coy Garrison told the Journal that the collapse of FTX gave the SEC the “political incentive” to pursue larger cases against crypto.
In January, a lawsuit was filed by the SEC against Genesis Global Capital, LLC and Gemini Trust Company, LLC, alleging that their program that permits users to earn interest on crypto tokens violates securities laws.
Gemini, a crypto lender that operates one of the largest exchanges in the US, said it will fight the lawsuit.
In its settlement with the SEC earlier this month, Kraken crypto exchange’s parent company agreed to stop offering “staking” services to US investors.
“Staking” is when investors lock up their digital assets in exchange for an interest-style yield. Borrowers can then use loaned assets to facilitate additional transactions on the underlying blockchain network.
According to the Journal, the case suggests that the SEC will likely order other crypto companies to stop offering so-called “staking” as well.