The US Securities and Exchange Commission (SEC) is seeking ways to exert pressure on the cryptocurrency markets. As lawsuits are filed against the biggest cryptocurrency exchanges, the agency welcomes billion-dollar fines.
The SEC filed lawsuits against Binance and Coinbase exchanges within a few days of each other in the middle of this year. In November, it targeted Kraken exchange. SEC Chairman Gensler compares the cryptocurrency sector to the wild west and states that companies accept illegality as normal in order to grow faster, but this comes with a price.
Kraken is accused of being an unregistered securities exchange in the lawsuit filed in November. However, the SEC does not provide clear guidance for platforms that want to offer their services in a registered manner.
Gensler claims that almost all altcoins are securities, while another US regulatory agency, the CFTC, claims that more than 50% of them are commodities. This leaves the uncertainty of what cryptocurrency exchanges should do to avoid the wrath of the SEC.
The SEC insists that blockchain-based assets – cryptocurrencies – are similar to traditional securities such as stocks. However, their structure, purpose, and pricing system are very different. The SEC will either invite all cryptocurrencies to register or arbitrarily label altcoins as securities without providing guidance and legal regulations, leading to lawsuits against exchanges and tokens.
As a result, cryptocurrency legislation expected to pass the House of Representatives in 2024 could increase legal clarity. However, Gensler may prevent these bills from passing the Senate with the support of Democrats, leading to a long legal battle.