Cryptocurrency Market News: Bitcoin Trips Amid Growing Regulatory Friction

Bitcoin (BTC) slipped below $63,000 on multiple occasions last week during a volatile stretch, but was trading closer to that level again Monday. The friction between regulators and the cryptocurrency industry was heightened last week after the U.S. Department of Justice (DOJ) charged founders of a non-custodial bitcoin wallet with money laundering, while crypto firm Consensys took the Securities and Exchange Commission (SEC) to court.

Samourai Wallet Developers Arrested

On Wednesday, the U.S. DOJ filed charges against Samourai Wallet co-founders Keonne Rodriguez and William Lonergan Hill for their alleged roles in facilitating more than $100 million in money laundering via their crypto mixing service.

The charges, which include conspiracy to commit money laundering and operating an unlicensed money transmitting business, underscore the government's ongoing crackdown on crypto privacy tools. Last year, a similar case was filed against the developers behind Tornado Cash, a privacy-enhancing decentralized application on Ethereum.

Following the legal action, other bitcoin wallet providers have decided to leave the U.S. market. zkSNACKs, which is the creator of another privacy-preserving bitcoin wallet called Wasabi Wallet, announced it's blocking all U.S.-based users from its wallet offering. Additionally, ACINQ, which is the creator of the self-custodial, Lightning Network-enabled PhoenixWallet, has decided to remove its wallet from the U.S. market following the action taken against Samourai Wallet.

On Thursday, the Federal Bureau of Investigation (FBI) also issued a warning for consumers against the use of crypto services that may operate as unlicensed money transmitters.

Consensys Sues SEC

In its lawsuit, Consensys is requesting that the court confirm that Ethereum’s native cryptocurrency, ether (ETH), is not a security. This legal move comes amid reports that the SEC already is seeking to define ether as a security.

In its legal filing, Consensys also argued that the SEC's overreach into the crypto space could disastrously halt the use of the Ethereum blockchain in the U.S., stifling a significant technological innovation. According to Fortune, Consensys had received an SEC Wells Notice, which indicated a coming lawsuit and accused Consensys's MetaMask wallet of acting as an unlicensed broker due to its staking features.

The lawsuit reflects broader frustrations within the crypto industry regarding the SEC's perceived lack of clear regulatory frameworks tailored to blockchain technology.

Stripe To Reenable Crypto Payments

Fintech giant Stripe has reentered the cryptocurrency arena, announcing on Thursday its plan to allow customers to accept cryptocurrency payments. This return to crypto initially will begin with acceptance of the USDC stablecoin via the Solana, Ethereum, and Polygon networks.

The strategic move marks Stripe's first foray back into accepting crypto payments since discontinuing Bitcoin support in 2018 due to its volatility. The announcement highlighted the improved transaction efficiency and affordability that crypto can now offer via the Solana network.

What To Expect in the Markets This Week

While some market analysts expected bitcoin's recent halving event to lead to a price boom, that has not been the case thus far. In fact, inflows into the spot bitcoin exchange-traded fund (ETF) market mostly have been negative since the halving on April 19, according to data from Farside Investors. This is despite the outflows from the Grayscale Bitcoin Trust (GBTC) slowing a bit.

In the future, the relationship between spot bitcoin ETF inflows and the bitcoin price will be closely watched, as some analysts already have predicted the ETFs will have a much greater impact on price than the halving going forward.