Cryptocurrency regulation is back in the spotlight with two major exchanges caught in the middle of the latest attempt by the U.S. Securities and Exchange Commission (SEC) to regulate the industry.
The SEC filed charges against Coinbase Global (NASDAQ:COIN) on Tuesday (June 6), just one day after it carried out similar actions against Binance and its founder Cho Changpeng. rice field. The spate of lawsuits against these cryptocurrency companies underscores the increasing aggressiveness of regulators to oversee the sector, according to experts.
What are the allegations against Binance and Coinbase?
The SEC is trying to get a firmer grip on cryptocurrency-related transactions, and has lashed out at Binance.Around SEC indictmentZhao-controlled Binance operated as an exchange, broker, dealer and clearing house, generating at least US$11.6 billion in revenue from client fees.
Regulators Say Binance Should Have Been Registered as an Exchange, Broker-Dealer and Clearing House
SEC Chairman Gary Gensler said the 13 charges filed against Zhao and Binance demonstrate widespread deception, conflicts of interest, lack of disclosure and deliberate evasion of the law by the accused parties. said there is.
“They sought to circumvent U.S. securities laws by issuing bogus regulations that they ignored behind the scenes to keep high-value U.S. customers on their platform,” he said in a press release. “People should be careful about investing their hard-earned assets using or in these illegal platforms.”
Guardian newspaper reported Binance told the SEC that it has responded to inquiries from regulators and is “considering settlement negotiations with regulators.”
About coinbase SEC claimed The virtual currency firm alleged that it violated “certain registration provisions” of the Securities Exchange Act of 1934 and “registration provisions of securities offerings” of the Securities Act of 1933.
“As alleged in our complaint, Coinbase was fully aware of the applicability of federal securities laws to its business activities, but deliberately refused to comply with them,” the SEC Enforcement Office said. Director Gerbil S. Grewal said in a statement.
He added, “While Coinbase’s calculated decisions could have yielded billions of dollars in profits, it does so at the expense of investors by stripping them of the protection they enjoy. It has been achieved,” he added.
Overall, the SEC has expressed displeasure with the role Binance and Coinbase play in the buying and selling of crypto assets, and has sharply condemned their alleged market manipulation.
“U.S. regulators argue that most digital assets qualify as securities and that exchanges sell them to U.S. investors without properly registering them in the U.S.,” Feinkia said. * Matteo Greco, research analyst at International (CSE: FNQ, OTC Pink: FNQQF) said. He said. He pondered whether the SEC’s actions could be replicated across jurisdictions and set new precedents.
Frank Borger-Gilligan, a securities attorney and former head of Tennessee’s securities regulator, made a similar point. “The SEC’s actions show that cryptocurrencies are moving toward regulation similar to securities, and should sound the alarm bells for incumbent exchanges to change the way they do business,” he commented.
Expert Considers Impact of SEC Indictment
Nick Kuriya, portfolio manager and head of cryptocurrency at Purpose Investments, told the Investing News Network (INN) that he was not surprised by the series of SEC lawsuits against Binance and Coinbase.
The financial expert said most of his conversations with investors this week involved “huge curiosity” from people wanting to learn more about why the companies were accused.
Kriya said he doesn’t think the SEC’s accusations should affect the underlying theory of cryptocurrency investing. He added that the SEC’s regulatory efforts are specifically focused on how crypto tokens are sold to investors.
“What it doesn’t affect is certain underlying technologies and the usefulness of these digital assets and cryptocurrencies,” he said.
Purpose Investments has launched several cryptocurrency-related exchange-traded funds (ETFs) as a way to give investors an alternative way to access the digital asset space. In May, the company announced an agreement Under it, Coinbase will “act as an additional sub-custodian of fund (objective) management holding digital assets.”
“The real issue here is effectively the classification of these crypto assets,” Kriya told INN. This expert shared the following thoughts on how the SEC is focusing in this review.
“Should (virtual currencies) be considered a commodity use? Should they be considered securities? Do disclosures need to be made? What safeguards need to be put in place in terms of operational procedures and compliance? I think that’s what the SEC is focusing on.”
Insider Intelligence cryptocurrency analyst Will Page said in an emailed note that the SEC is tasked with regulating the cryptocurrency sector amid “no regulatory framework in the United States.” .
In his view, the SEC’s latest attempt represents a broader crackdown on violations. “Cryptocurrency companies may find themselves in a bind if they operate on the ‘better forgiveness than permission’ doctrine,” Page said.
Experts who added these lawsuits are likely to “shatter already weak consumer confidence in cryptocurrencies.”
The cryptocurrency community is uneasy about the SEC accusations and their financial impact on the market.
“This is a malicious lawsuit against a cryptocurrency platform that has made every effort to comply with the law,” said Adam Kovacevic, CEO of the Chamber of Progress. “If we want a safe cryptocurrency industry here in the U.S., we should encourage regulatory compliance that Coinbase is willing to pursue.”
Impact on Coinbase, Binance and Bitcoin
Coinbase is publicly traded and has seen its value drop significantly after the SEC accusations.
As of Wednesday (June 7) at 10:43 a.m. EDT, Coinbase is trading at a price of US$52.61, a significant drop from the year’s high of US$83.99. . It has plunged 16.81% so far this week.
Speaking of Binance pulled by investors According to cryptocurrency research firm Nansen, exchanges have recorded $791.6 million in exodus after the allegations against the company went public.
Bitcoin, the leading cryptocurrency, also took a hit following the initial allegations against Binance and Zhao.
After falling to a monthly low of US$25,750 on Monday (June 5), bitcoin rebounded following allegations against cryptocurrency exchanges, rebounding above US$27,000 on Tuesday.
Bitcoin is currently trading at $26,430, up nearly 60% since the beginning of the year.
Points for investors
The crypto industry has so far shown unparalleled resilience to challenges from regulators. Although the industry continues to face regulatory questions, experts still believe in the potential that comes with digital assets.
“I hope the industry and investors will have more clarity through this process, because I think everyone wants clarity,” Kriya said.
Binance and Coinbase Frequently Asked Questions
Will the SEC freeze Binance and Coinbase assets?
At this time, it is difficult to predict what will happen to assets held by Binance and Coinbase. However, it is clear that investors using both platforms are intimidated by the fees. This has led providers of the digital asset investment class to look for alternatives.
What does the SEC claim on Coinbase stock mean?
Coinbase’s stock price dropped significantly after the SEC indictment. The company continues to trade on the Nasdaq market and closed at $51.61 per share on the same day it was billed by the SEC.
What do the SEC indictments against Coinbase and Binance mean for Bitcoin?
When the SEC filed charges against Binance and Coinbase, Bitcoin’s price initially fell, but eventually rallied and quickly stabilized above US$26,000.
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Securities Disclosure: I, Brian McGovern, have no direct investment rights in any company mentioned in this article.
Editorial disclosure: Investing News Network does not guarantee the accuracy or completeness of information reported in interviews. The opinions expressed in these interviews do not reflect those of Investing News Network and do not constitute investment advice. Readers are encouraged to conduct their own due diligence.
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