Major coins extend losses

Crypto was thrown for a loop by some news on the regulatory front, with a big exchange settling charges connected with crypto staking. Negative headlines blared, and a pall was cast.

Bitcoin sank below $22,000 for the first time in three weeks. Some losses in the neighborhood of 6%-8% were experienced by large-cap altcoins, including Cardano and Solana. Anxiety is on the rise heading into Super Bowl weekend. Mainstream buzz almost vindictively surrounds the fact that this year's telecast is entirely devoid of crypto commercials.

When we looked at the largest digital asset early Friday, things actually weren't as bleak as we might have expected. At one point yesterday, BTC fell just below $21,700. But, as of 8:30 a.m. (EST), BTC was inching closer to $21,800 and flashing a touch of hourly green (+0.1%).

Without admitting or denying allegations made by the U.S. Securities and Exchange Commission (SEC) in a complaint filed yesterday, Payward Ventures, Inc. and Payward Trading Ltd., kindred registered companies comprising the exchange known as Kraken, settled charges of failing to register their crypto asset staking-as-a-service program.

According to the SEC, the two Kraken entities agreed to immediately cease offering/selling securities via staking programs and to pay $30 million in penalties.

Staking is a process in which investors lock up their crypto tokens as part of validating blockchain data in exchange for a reward of newly issued tokens.

The complaint took issue with Kraken playing up its staking program's benefits while at the same time, the SEC emphasized, downplaying risks.

Decentralized finance (DeFi) industry members are bracing for more actions ahead. The SEC has previously gone after lending companies such as BlockFi. Lending and staking are similar, SEC Commissioner Gary Gensler has said publicly.

And so now this Kraken settlement would seem to give the SEC "a big win as it continues its efforts to police the broader crypto ecosystem," CoinDesk said.

According to Dune Analytics, there's a whole lot of staking going on, particularly on Ethereum, and most of this activity depends on the staking services sector.

SEC Commissioner Hester Pierce publicly rebuked her agency over the quashing of Kraken’s staking program, arguing that regulation by enforcement “is not an efficient or fair way of regulating” an emerging industry.

Kraken, per Decrypt, has seen $2.7 billion in crypto staked on the exchange. It can still offer staking for non-U.S. investors.

“As the SEC has so far not even approved a Bitcoin spot ETF, it seems unlikely that the agency would have approved a slightly more obscure product like staking,” said Markus Thielen, head of research at Matrixport, in a client note.

He argued that there will be winners to come out of this regulatory action – those being non-U.S. staking providers.

So heavily star-packed and prevalent were crypto ads during last year's Super Bowl, Madison Avenue wound up dubbing the annual television event the "Crypto Bowl." What a difference a year makes. "There's zero representation in that category," said Mark Evans, head of ad sales for Fox Sports.

Evans told the Associated Press that this weekend's NFL extravaganza was 90% booked by advertisers as of the end of summer, and that there were at least four crypto-related companies set to run spots (which cost on average about $7 million). But in the wake of FTX's blockbuster implosion this past November, any/all plans for crypto ads ultimately wound up scuttled, Evans said.

Six crypto commercials aired during the 2022 Super Bowl. Some viewers may recall Coinbase's strangely effective commercial involving a colorful, bouncy QR code. Much more infamous is the FTX ad featuring comedy icon Larry David being skeptical about various emerging technologies over the centuries.

 "The big splashy Super Bowl ads of 2022 are almost laughable in retrospect," Vox said. "Unless you’re one of the celebrities now facing a lawsuit for promoting crypto exchanges."

Nevertheless, as AdAge pointed out, blockchain will not be entirely absent from the big game. Limit Break, a blockchain-based, Web3 game developer, is airing a Super Bowl ad that will give away free NFTs. "Brands are still using this year's Super Bowl to experiment with Web3 marketing," AdAge said.