- Kraken has argued that Congress should limit the SEC’s authority and supported more transparent cryptocurrency regulations.
- In an effort to challenge the SEC’s position on cryptocurrencies and obtain regulatory clarity, Coinbase has intensified its legal dispute with the agency.
- Denying the accusations and contesting the SEC’s jurisdiction over the administration of cryptocurrency assets, Binance is taking the SEC to court.
CryptoCaster Quick Check:
Leading cryptocurrency exchange Kraken has teamed up with industry heavyweights Binance and Coinbase to take on the US Securities and Exchange Commission (SEC) in court. The ongoing conversation about cryptocurrency regulation may be significantly impacted by these lawsuits.
Entering the extended legal battle with the US Securities and Exchange Commission (SEC), prominent cryptocurrency exchange Kraken has teamed up with industry heavyweights Coinbase and Binance. The ongoing conversation about cryptocurrency regulation may be significantly impacted by these lawsuits.
On May 10, 2023, Kraken testified before the House Financial Services Committee and the House Agriculture Committee, claiming that the laws currently in place are insufficient to address the needs of the digital asset sector.
Kraken Intensifies Its Standoff with the SEC
The discussion emphasized how Congress must create a more thorough set of regulations to protect investors and consumers. The SEC declared its intention to sue Kraken the day following this testimony.
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Kraken responded firmly to this by filing a motion to dismiss the lawsuit. The foundation of the exchange’s argument is its assertion that the digital assets in question are not investment contracts and, as such, are not subject to SEC regulation.
The Howey Test is used by the SEC to determine this classification. If an asset satisfies any one of the test’s four requirements, it may be categorized as a security. Kraken contends that none of the assets it has listed fit these criteria.
A recent Kraken blog post explained its point of view:
“Even taking all of the SEC’s allegations in the Complaint as true – and many are not – its argument is flawed as a matter of law.”
Coinbase and Binance Legal Actions Continue
Another major participant in the cryptocurrency market, Coinbase, is intensifying its own legal dispute with the SEC. The exchange has filed an appeal with the SEC, demanding that it decide how to categorize cryptocurrencies in a definitive manner. Chief Legal Officer of Coinbase Paul Grewal characterised the SEC’s position as follows:
“Arbitrary and capricious, an abuse of discretion, and contrary to law.”
In the meantime, Binance is getting ready to go to court in Washington with the SEC. Allegations of artificially inflating trading volumes and permitting the trading of cryptocurrency tokens deemed securities are part of the SEC’s lawsuit against Binance.
In response, Binance reaffirmed its contention that the SEC is not equipped to regulate digital assets. Coinbase has taken a similar stand in its legal battle.
These large exchanges’ collective position reveals a basic disagreement over the SEC’s authority to oversee the cryptocurrency industry. The industry needs sensible guidelines, as evidenced by its coordinated efforts to challenge the SEC’s authority over crypto asset management and seek legal clarity.
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