A couple of big cryptocurrency stories to look out for this week

Quick Take

  • U.S. inflation data is slated for release on Tuesday, and market participants will watch the figures closely.
  • The SEC has put crypto firms on high alert over staking products after last week’s action against Kraken.

Inflation data on Tuesday will shed light on the health of the U.S. economy, while regulators may also remain in the spotlight this week. Here's what to watch out for:

U.S. inflation data

After a week dominated by regulatory actions, markets will now look to Tuesday's U.S. CPI data.

January inflation data is scheduled to be released at 8:30 a.m. EST on Tuesday. Analysts' estimates see the headline figure increasing to 6.2% year-on-year, down from 6.5% in December. Crypto and traditional stock markets were buoyed by December's data.

Still, month-on-month inflation is expected to have climbed by 0.4%, and the Federal Reserve will no doubt be watching the release closely.

Higher-than-expected inflation figures could lead to the Fed continuing to increase interest rates. Higher interest rates can have a negative effect on crypto as the asset class behaves like a risk asset — which are sensitive to increases in the rate. 

On Friday, annual revisions from the Bureau of Labor Statistics revealed inflation over the past few months was slightly higher than previously reported. Inflation was revised for December to 0.1% from -0.1%. November was changed to a 0.2% increase rather than the 0.1% previously reported.

Regulatory clampdown?

The U.S. Securities and Exchange Commission put crypto firms "on notice" last week with its action against Kraken.

The regulator said Thursday that crypto intermediaries ought to provide "proper disclosures and safeguards required by our securities laws" when offering services such as lending or staking. Kraken subsequently agreed to end its on-chain staking services for U.S. clients and will pay $30 million.

"Those other platforms should take note of this and seek to come into compliance," said chief Gary Gensler on Friday.

Coinbase, through Chief Legal Officer Paul Grewal, said the firm's staking product should not be restricted. Grewal outlined why in a blog post on Friday. The SEC's next move may have wide-reaching implications for crypto firms and markets, as it did last week. 

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