Digital currency markets are on edge after a flurry of aggressive regulatory actions from U.S. authorities over the past few days.

Bitcoin was slightly higher at $21,826.68 at around 05:31a.m. ET, according to CoinDesk data.

Investors are digesting a number of major regulatory actions in the U.S., as authorities look to rein in the once free-wheeling cryptocurrency industry.

On Monday, the New York State Department of Financial Services told Paxos to stop minting new Binance USD, or BUSD, stablecoins. A stablecoin is a type of digital currency that is pegged to a real-world asset. BUSD is pegged one-to-one with the U.S. dollar. Paxos issues BUSD, the third-largest dollar-pegged cryptocurrency.

Stablecoins are often backed by real-world reserve assets, such as bonds and cash. They are used to trade in and out of different cryptocurrencies, as a trader does not need to convert money back to fiat currencies.

BUSD remained relatively stable and close to its $1 peg after the New York regulator’s orders. Paxos said that BUSD will continue to be redeemable through at least Feb. 2024. People can redeem funds in U.S. dollars or convert BUSD to Paxos’ own stablecoin called Pax Dollar (USDP).

Paxos confirmed that the Securities and Exchange Commission has notified it that the agency could recommend an action that alleges BUSD is a security, and that Paxos should have registered the token offering under federal securities law.

The market is waiting to see what the exact SEC charges are toward Paxos, and whether that might have implications for other stablecoins such as USD Coin (USDC) and tether (USDT). There is no official SEC action against Paxos currently.

Last week, cryptocurrency exchange Kraken settled with the SEC over allegations that it sold unregistered securities.

U.S. regulatory action has picked up on parts of the cryptocurrency industry, following a year of turmoil that saw nearly $1.4 trillion wiped off the market, along with bankruptcies, failures of projects and companies topped off by the collapse of major exchange FTX.

Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, said that there might not be a major collapse in coin prices after the huge sell-off last year.

“The market seems to be taking the news quite well and that sentiment remains cautiously optimistic given we might have seen most of the selling in the market occur over the last year,” Ayyar told CNBC on Tuesday.

Investors are waiting to see what happens next on the regulatory front.

“We’re seeing a lot of scrutiny across various sectors in crypto in the U.S., with the two most recent areas being staking and stablecoins. This is an obvious repercussion of the fallout from FTX, Luna, and the general contagion in crypto over the last year,” Ayyar said.

“The markets might take some time to consolidate here and wait and watch whether there are further events that play out in terms of regulatory crackdown, hence we could see a couple of weeks of sideways action.”

– CNBC’s Rohan Goswami contributed to this report.