Pattern Emerges Over the SEC’s Crypto Exchange Clampdown

Data analysis platform Kaiko has observed a pattern in the clampdown on US-based crypto exchanges. Kaiko’s observation suggests regulators in the US target flourishing crypto exchanges.

This chart shows the number of traded instruments listed on U.S.-based crypto exchanges since 2018.

Fascinating to see that Bittrex was first charged by the SEC and had the most new crypto assets.

Coinbase ranks second, https://t.co/e7EP5Z1Dxm about equal.

Who is next? ? pic.twitter.com/TKiPO2uqCV

— Kaiko (@KaikoData) June 9, 2023

In a tweet, Kaiko indicated that the Securities and Exchange Commission (SEC) first charged Bittrex Exchange over regulatory issues. At the time of the charge, Bittrex had the highest number of instruments listed on its exchange.

After Bittrex, Kaiko noted that the SEC charged Coinbase, which ranks second in the number of listed instruments. The SEC has recently sued Binance for allegedly violating regulatory protocols. Binance ranks close to Kraken, with both crypto exchanges claiming the third and fourth positions in listed instruments.

If Kaiko’s observed pattern holds, Gemini will become the next crypto exchange the SEC would sanction. However, Kaiko’s formula is not sacrosanct. Hence, there is no guarantee that the pattern will continue.

Regulatory clampdowns were common in the crypto industry a few years ago. With many jurisdictions establishing regulatory frameworks or in the process of doing so, clampdowns became less rampant. That led to crypto becoming more acceptable across several mainstream industries.

The SEC’s latest lawsuits against two high-profile crypto exchanges threaten to set crypto development back in the US by a mile. Many users have criticized it, with the crypto market resisting the initially generated FUD. After dropping by nearly 7%, Bitcoin recovered and upheld its bullish momentum.

Although the overall market has resisted the FUD, Binance continues to feel the brunt of the regulations. In the last 72 hours, the Bitcoin market depth on Binance.US has collapsed. Kaiko noted that the bid and ask depth have fallen over 70% since June 6. Users have responded to the clampdown by staying away from the jurisdiction but not from the market. Bitcoin trades at a slight discount on Binance.US after reports emerged that the exchange might halt USD withdrawals.

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