The U.S. Securities and Exchange Commission (SEC) is investigating Coinbase – the country’s largest exchange – and has also targeted global giant Binance, according to Senator Cynthia Lummis, a staffer in Senator’s office. Binance operates a separate entity (Binance.US) that serves limited US customers.
Both Coinbase and Binance went to meet the SEC in an attempt to appease the regulator. But, apparently, the actions of the companies were not enough to improve relations with the commission.
While the more crypto-friendly US regulator, the Commodity Futures Trading Commission (CFTC), is more likely to approve an approach that is not based on law enforcement and lawsuits.
According to Forbes report dated August 4, each US crypto exchange is at various stages of investigation by SEC officials.
Cryptocurrencies are not securities… yet
Crypto assets have not yet been officially classified as securities, so the SEC is technically acting outside of its jurisdiction.
This was hinted at by Republican Senator Tom Emmer, who said last month that the commission and its chairman Gary Gensler were “obsessed with expanding the size of their anti-cryptocurrency unit, using enforcement to unconstitutionally expand their jurisdiction.”
However, there is hope in the crypto industry as, according to sources, the SEC urgently wants to resolve its dispute with the CFTC over crypto jurisdiction.
“If this issue is not resolved domestically, lawmakers will have to intervene and Congress will most likely side with the CFTC,” said the official, whose identity remains unknown.
Two bills have recently been introduced to allow the CFTC to have more jurisdiction over cryptocurrencies, however there is less than a 50% chance of either being passed this year. The first is the Loommis-Gillibrand Bill, introduced on June 7, and the second is the Digital Consumer Protection Act, which was announced this week.
The Battle for Regulatory Control of Cryptocurrencies
According to one crypto exchange executive, many U.S. exchanges have likely received notices from the SEC that action will be taken against them. The chief executive of one of the exchanges said that these cases are separate from the standard procedures of the SEC.
Binance.US this week delisted the AMP asset, which the SEC recognized as a security.
The battle for regulatory control of cryptocurrencies in the U.S. continues and is unlikely to end any time soon – encouraging for crypto companies struggling to comply with regulators.
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