As a seasoned analyst with years of experience navigating the complex world of finance and regulations, I find myself deeply concerned by the ongoing tussle between the SEC and the crypto industry. The SEC’s stance on crypto assets seems to be a classic case of moving goalposts, leaving many in the industry feeling frustrated and confused.
The Securities and Exchange Commission (SEC) has clarified that its understanding of “cryptocurrency asset securities” is flexible, considering various factors rather than just the nature of the asset itself. Yet, some members within the industry have criticized the SEC for using this term to exclusively refer to assets.
In response to the ongoing lawsuit involving Binance, the U.S. Securities and Exchange Commission explained the meaning of “crypto asset securities” in a court document footnote. This interpretation has sparked significant debate, with some arguing that it seems the agency is inconsistent with its own explanation.
The regulatory body stated that the term in question does not directly refer to the digital assets themselves, but rather encompasses “the comprehensive bundle of contracts, agreements, and mutual understandings surrounding the trading and circulation of the [cryptocurrency].” They mentioned they no longer employ this abbreviated term and expressed regret for any confusion it may have caused. However, they still contend that the ten assets Binance is said to have listed and sold are considered securities based on how the exchange handles them. This classification includes tokens such as Solana’s SOL and Polygon‘s MATIC.
The regulatory body is also targeting Kraken for similar issues, charging it with functioning as an unregistered securities exchange, broker, dealer, and clearing agency. In response to these accusations, brought against it by the SEC in a recent lawsuit, Kraken has voiced its opposition and argued that the digital assets in question do not constitute investment contracts since they lack the rights and obligations associated with stocks, bonds, or other financial assets subject to regulation by Congress.
The SEC Has Previously Labelled Crypto as Securities Without Considering How They Were Offered
Despite the SEC’s actions, those in the cryptocurrency sector find themselves growing increasingly frustrated. It appears that the SEC prefers to enforce rules rather than collaborate with stakeholders and the government to provide clarity on digital assets and foster safe growth of this industry within the U.S. Paul Grewal, Coinbase’s chief legal officer, has voiced his criticism of the SEC’s shift in stance concerning its revised definition of “crypto asset securities.
He posted on X, “somehow ETH transaction HAVE changed a meaningful way that the Ten Crypto Assets have not so as to avoid the agency’s clutches. How? That’s apparently for the @SECGovto know, and the rest of us to find out only if and when we are sued.” He added, “It’s plainly false that @SECGov has “consistently maintained” anything other than that tokens by themselves are securities.”
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2024-09-16 10:50