• The US Securities and Exchange Commission (SEC) is suing crypto exchanges Coinbase and Binance for allegedly trading in unregistered securities.
• However, the SEC has failed to create a regulatory environment for the trade of cryptocurrencies or define what constitutes an unregistered security.
• Coinbase CEO Brian Armstrong has stated that the exchange attempted to register with the SEC but failed.
The US SEC’s Lawsuit Against Crypto Exchanges
The US Securities and Exchange Commission (SEC) and its Chair, Gary Gensler, have sued crypto exchanges Coinbase and Binance for allegedly trading in unregistered securities. They argue that these exchanges failed to register with the SEC as required by law.
Crypto Industry Lacking Regulatory Clarity
Unfortunately, creating a regulatory environment for the trade of cryptocurrencies has proven difficult for regulators thus far. The SEC has not yet defined what constitutes an unregistered security, leaving companies unsure as to how they can legally operate within this space.
Coinbase Attempted to Register With the SEC
Coinbase CEO Brian Armstrong responded to the lawsuit by stating that his exchange had attempted to register with the SEC but failed due to a lack of clarity from regulators. He emphasized that “the lack of clear rules and regulations governing digital assets makes it difficult for companies like ours to comply with laws that are unclear or subject to different interpretations.”
Conflicting Statements From Regulators
Compounding this issue is that both the SEC and Commodity Futures Trading Commission (CFTC) have made conflicting statements regarding what exactly constitutes a security or commodity in regards to cryptocurrency trading. This leaves many questions unanswered as regulators move forward with their legal action against crypto exchanges such as Coinbase and Binance.
It appears that until regulators provide greater clarity on this matter, companies operating in this space will remain at risk of being sued by authorities over allegations of trading in unregistered securities without knowing exactly which laws they may be breaking or which regulations they may be failing to abide by.