Shares of Coinbase Global (NASDAQ:COIN) declined 3% on Thursday, as regulators around the world step up their scrutiny of crypto-related businesses.
China has cracked down on its domestic crypto industry in recent weeks. In June, China’s central bank told its largest lenders and mobile payment companies to no longer provide services to crypto-focused companies. The Chinese government is also reportedly considering a move against the use of stablecoins within its borders ahead of the mainstream rollout of its digital yuan initiative.
Meanwhile, the European Union is preparing to tighten enforcement against the use of cryptoassets for nefarious purposes, according to Reuters. The new rules will reportedly require crypto service providers to collect user transaction data in an effort to combat money laundering.
And in the U.S., Sen. Elizabeth Warren sent a letter to Security and Exchange Commission (SEC) Chairman Gary Gensler on Wednesday requesting information on how the regulator intends to better protect crypto investors. Warren is seeking to “determine if Congress needs to act to ensure that the SEC has the proper authority to close existing gaps in regulation that leave investors and consumers vulnerable to dangers in this highly opaque and volatile market.”
It was only a matter of time before governments stepped up their regulation of the crypto market, which has long been fraught with scams, theft, and other illegal behavior. Coinbase has taken a largely pro-regulatory approach, so it may have less work to do than many of its competitors to satisfy any new rules that regulators impose. Still, a global regulatory crackdown could serve to lower demand for cryptoassets among users and investors, which would likely weigh on Coinbase’s growth.
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