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Silvergate, Coinbase extend losses as regulatory specter hangs over crypto

Quick Take

  • Silvergate was down 3.7% in afternoon trading in New York. Coinbase slipped 0.8%.
  • Despite the regulatory clampdown gripping crypto, MicroStrategy and Block were in the green.

It’s been a mixed bag today for crypto-related equities as U.S. regulators continued a clampdown that has hit both staking and stablecoins.

Silvergate fell 3.7% to $14.46 by 2 p.m. EST, according to Nasdaq data. The crypto-friendly bank has faced increasing scrutiny over the past few months following the collapse of FTX amid fears of increased regulatory oversight in the U.S. on banks that interact with cryptocurrency. SI was the most shorted stock on Wall Street, according to a recent report from MarketWatch.

SI chart by TradingView

Coinbase was trading around $56, down about 0.8% having pared earlier losses. Shares in the exchange traded down 22% last week as the Securities and Exchange Commission said the Kraken exchange agreed to pay a $30 million penalty and cease its staking products for U.S. customers.  

COIN chart by TradingView

“Last week’s share price decline and today’s extended losses are likely related to the recent reports of the SEC’s desire to crack down on staking,” said Ryan Coyne, senior equity analyst at Mizuho.

Coyne said that despite the crypto rally in January, retail investors haven’t returned to the market just yet. “If true, this would put pressure on COIN’s top line, as the majority of COIN’s revenue is earned from transaction fees it charges on retail trades,” he said. 

MicroStrategy and Jack Dorsey’s Block were trading higher, gaining 2% and 3%, respectively. All major U.S. stock indices were higher, with the S&P 500 gaining 1.15%, the Nasdaq 100 rrising 1.7% and the Dow Jones Industrial Average adding 1%.