USA Legal Action Against Cryptocurrency Companies
The tensions between the United States government and crypto-industry are deeping with newly filed lawsuits against the two biggest cryptocurrency exchanges, Binance and Coinbase. The Securities and Exchange Commission (SEC) asked a federal judge to freeze the assets of Binance because the platform was not registered with the SEC, regardless of operating as a security exchange. Coinbase was accused of the same law violating.
The industry is called by government officials the “Wild West,” and the attempts to legitimize crypto are still unsuccessful. The crypto businesses are under close supervision of Washington, and SEC represents rejects the fact of its possibility to become a part of the traditional financial system. The demise of several well-known crypto companies and the collapse of crypto prices last year led to the loss of billions of dollars by investors.
The results of court proceedings can significantly slow down the growth of the industry or, alternatively, limit the regulatory authority of the Securities and Exchange Commission. However, SEC Chair Gary Gensler said the agency has enough power to regulate crypto-businesses.
Federica Pantana, an attorney at Davidoff Hutcher & Citron in New York who is responsible for SEC cases, expressed her vision: “With the SEC taking a strong enforcement agenda, there is no question that firms have to take the view that crypto assets are securities and platforms that exchange these assets have to accept that.”
She is sure that after the legal battle, companies trading crypto will need to register with the SEC or close their businesses. Pantana thinks that many companies will drop the industry. Treasury Secretary Janet Yellen is also for the SEC's protection of crypto consumers and investors.
Democratic and Republican Parties introduced several bills relating to the industry last year. These laws put crypto under the authority of the Commodity Futures Trading Commission and made products such as stablecoins more legitimate. However, Janet Yellen expressed the opinion that there are holes in the system that need additional regulation. Such bills may save the crypto industry from SEC lawsuits.
Now, the most viable piece of legislation is in the House Financial Services Committee, chaired by Representative Patrick McGarry, a North Carolina Republican who chairs the committee. The bill was co-authored by Glenn Thompson, a Pennsylvania Republican who chairs the House Agriculture Committee.
They make attempts to delineate agencies' jurisdiction over specific digital assets and “strike the appropriate balance between consumer protection and encouraging responsible innovation.” Thanks to the new bill, digital-asset issuers can get an exemption from securities laws if they meet specific conditions.
The essential task for Congress is to draft the law to clear up this confusion. Periane Boring, a founder of the Chamber of Digital Commerce, said that lawsuits against Coinbase and Binance are “arbitrary and capricious” and “the SEC's vigorous enforcement in this space is politically motivated, opening up the legal risk against SEC.”