Cryptocurrency prices were under pressure on Monday ahead of key inflation data and the latest regulatory action in the U.S.

The total market capitalization of the cryptocurrency market fell below $1 trillion on Monday afternoon, according to data from CoinMarketCap, its first drop below this threshold in three weeks.

Early Monday, stablecoin issuer Paxos said the New York Department of Financial Services (NYDFS) had ordered the company to stop creating new units for Binance's BUSD stablecoin, the latest regulatory action in what has already been a busy year for actions against crypto companies.

"If you look at the what has taken place, it's de-banking the [crypto] industry, it's cutting off stablecoins, and it's also clarifying unregistered securities," Caitlin Long, founder and CEO of Wyoming based crypto custodian, Custodia Bank told Yahoo Finance Live on Monday.

After seeking to become a member bank of the U.S. Federal Reserve system, Long's firm was denied approval on January 27.

In addition to regulatory actions, investor enthusiasm for crypto assets has also moderated in recent weeks after a sharp rally to start 2023.

Jan van Eck, CEO of global asset manager VanEck, told Yahoo Finance the first half of the year for risk assets such as equities and crypto doesn't look bright given the strength of economic factors such as inflation and the labor market, which suggest "higher interest rates for longer."

With January's U.S. consumer price index set for release tomorrow, expectations in the crypto options market look less rosy than last month according to Christopher Newhouse, a crypto options trader for industry investment firm, GSR.

"Ahead of this CPI print, there's been elevated volumes and prevalent liquidations on the long side and a large supply of calls sold at the $25,000 price, which may act as a strong level of resistance," Newhouse told Yahoo Finance of bitcoin's options market.

Demand for "downside protection," or puts for both bitcoin and ether, has picked up over the past week, Newhouse said. Positions are "negative across the board" he added, also pointing to "bearish regulatory concerns."

The price of bitcoin (BTC-USD) was off about 1% on Monday afternoon to trade near $21,600.

Since the beginning of the year, the SEC has brought 4 enforcement actions against crypto firms, including a $30 million settlement with U.S exchange Kraken last week. As part of the settlement, Kraken immediately eliminated its staking program for U.S. customers.