© Thomson Reuters Photo files. the image shows an image of the cryptocurrency and the Coinbase logoManya Saini
(Reuters) - Coinbase Global Inc. It fell 15% in midday trading on Thursday after the US Securities and Exchange Commission threatened to sue cryptocurrency exchanges for some of its products.
Global regulators are keeping a close eye on the cryptocurrency world after a series of catastrophic crashes last year wiped over $1 trillion from the digital asset sector's market cap.
Bitcoin Price Falls Amid Crypto Market Turmoil Bitcoin Price Drops Amid Crypto Market Turmoil
"This news highlights the regulatory challenges and uncertainties facing the US cryptocurrency industry under the current administration," said analysts at BofA Global Research.
Analysts at KBW Brokerage say the SEC is expected to send a message to Coinbase from Wells, and the move is likely to send shares of the crypto exchange reeling.
The company's shares fell overall last year, losing about 86% of their value.
Coinbase Shares Fall Amid Industrywide Drop, https://www.receiving.com/graphics/COINBASE-STOCK/gdpzqkbqkvw/chart.png
The possible enforcement action by the SEC is likely related to aspects of Coinbase's spot market, as well as the discontinuation of its Earn, Prime, and Wallet services, the company said.
Staking is the process by which cryptocurrency holders voluntarily participate in verifying transactions on the blockchain. These products often offer great returns to customers.
"We have specifically asked the SEC to determine which assets on our platform can become securities, and they have refused to do so," Coinbase said.
Meanwhile, analysts at TD Cowen say the only way to get clarity on how the law applies to crypto solutions is through litigation.
Last month, Coinbase posted a fourth-quarter loss as trading volume on cryptocurrency exchanges came under pressure from industry-wide declines. It cut 20% of its workforce, or about 950 jobs, as part of a restructuring plan earlier this year.
(Reporting by Mania Saini in Bangalore; Editing by Shinjini Ganguly and Devika Syamanath)