The Securities and Exchange Commission (SEC) lawsuits against cryptocurrency exchanges Binance and Coinbase are an opportunity to create clear crypto regulations in the United States, the leaders of two companies working with crypto and blockchain believe.
On June 5, the SEC charged Binance, which operates the largest crypto asset trading platform in the world, and its founder Changpeng Zhao with a variety of securities law violations, including operating unregistered exchanges, broker-dealers, and clearing agencies; misrepresenting trading controls and oversight on the Binance.US platform; and the unregistered sale of securities.
The next day, June 6, the SEC also filed charges against another crypto exchange Coinbase alleged that it had been operating its trading platform as an unregistered national securities exchange, broker, and clearing agency.
Coinbase was also charged for failing to register the offer and sale of its crypto asset staking-as-a-service program.
The lawsuits mark a major inflection point for the crypto industry in the US, according to Holger Arians, the CEO of cryptocurrency payment service provider BANXA Holdings Inc.
“These major enforcement actions against two of the biggest players in the space underscore the murky regulatory waters that many companies are attempting to navigate – despite their best efforts to coordinate with authorities and remain compliant,” Arians said.
He added that the lack of clarity in the US results in many crypto companies looking to other global jurisdictions to base their operations.
“Regions such as Europe, the Middle East, and Asia have each advanced comprehensive new regulatory regimes that offer more certainty for these businesses going forward,” he said.
“Nonetheless, attempts are underway on the part of US lawmakers to create much-needed new regulatory frameworks for the crypto industry, and I’m optimistic their efforts will create an environment that fosters innovation while also protecting investors and traders.”
Crypto regulations 'lack clarity'
RocketFuel Blockchain Inc (OTCQB:RKFL) CEO Peter Jensen agreed that the lawsuits have provided an opportunity to create clear regulations for US crypto companies.
“The reason this happening is that the lack of regulation or just the lack of clarity on the regulations makes it hard for us to figure out exactly what the rules are and thereby follow them,” Jensen told Proactive.
He noted that the lawsuits had a limited impact on RocketFuel, as a blockchain-powered payment solution, not a crypto exchange.
Like Arians, Jensen is concerned that, without clear regulations, the US will fall behind other nations who have been innovating in the crypto space.
“I hope that the US government will get out in front like they normally are with technology,” Jensen said.
The SEC lawsuits haven’t changed Grayscale Investments’ conviction around the broader digital asset ecosystem, according to their Global Head of ETFs Dave LaValle.
“Volatility and uncertainty is something that has been endemic of this asset class,” LaValle told Proactive.
He noted that he had observed a divergence between the performance of the assets themselves and the individual companies, citing as an example the continued strong performance of Bitcoin miners.
“It really hasn’t changed our conviction around the broader digital asset ecosystem or the importance of a digital economy going forward,” he said.
Contact the author at emily.jarvie@proactiveinvestors.com
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