Over the past few months, it is not any news that many companies operating in the crypto industry have come under regulation and surveillance by the US Securities and Exchange Commission (SEC).
In particular, some of these companies have been subjected to heavy penalties and restrictions, while others have been forced to temporarily shut down or change their business model to comply with current laws.
Crypto news: from Coinbase to Tron, the latest moves by the SEC
Coinbase, one of the world’s largest cryptocurrency trading platforms, was one of the latest companies in recent days to be hit by the SEC.
In recent days, the SEC announced that Coinbase would be sued for alleged securities law violations for its cryptocurrency trading platform. The SEC alleges that Coinbase sold unregistered securities and violated other federal investor protection laws.
In more detail, the US Securities and Exchange Commission (SEC) issued a Wells notice to Coinbase, warning the company that it had identified potential violations of US securities laws.
This warning is the second issued by the SEC to a cryptocurrency entity, following the warning issued in February to stablecoin issuer Paxos.
Coinbase CEO Brian Armstrong has publicly criticized the SEC’s decision, arguing that the company has always operated in good faith and in close cooperation with regulators.
However, the SEC continued to pursue its legal action against Coinbase, imposing financial penalties and forcing the company to change some of its business practices.
Another company that has come under pressure recently from the SEC is Tron, the China-based cryptocurrency platform.
A few days ago, the SEC sued Tron for alleged securities law violations, alleging that the company sold unregistered securities to US investors.
The founder, Justin Sun, responded to the SEC’s allegations by justifying his actions and declaring that he and the company are innocent and that he is working to resolve the situation as quickly as possible.
The indictment specifically concerns certain companies he owns and controls, including.
Tron Foundation Limited (i.e., the so-called Tron Foundation), the BitTorrent Foundation, and Rainberry.
The unregistered securities would be precisely the TRX cryptocurrency and the BTT token.
However, the SEC subpoena could have a negative impact on the value of Tron’s cryptocurrencies, which have seen a sharp price drop several times throughout its history.
Finally, one of the most iconic challenges with a crypto company, the court fight with Ripple.
The situation between the SEC and Ripple
The case between Ripple and the Securities and Exchange Commission (SEC) is one of the most relevant and discussed cases in the cryptocurrency world, as it could have major repercussions on the regulation of this market.
It all began in December 2020, when the SEC filed a lawsuit against Ripple, accusing it of selling unregistered securities, namely the cryptocurrency XRP, to its investors.
The SEC argued that XRP was a security and as such had to be registered with the SEC, but Ripple instead classified XRP as a digital currency.
Such a ruling could have set an important precedent, as many other cryptocurrencies could have been hit with the same charges.
The situation is further complicated by the fact that Ripple was created with the goal of becoming a platform for cross-border payments, which could have revolutionized the banking industry. If Ripple had been forced to stop selling XRP, its business model would have been seriously compromised.
Ripple’s defense was mainly based on the argument that XRP is not a security but a digital currency, and therefore should not be subject to the same rules as securities.
In addition, Ripple argued that the SEC would not have the power to regulate XRP because it was not created as a security.
The lawsuit took place during the Trump administration, but in January 2021, shortly after President Biden took office, the SEC asked that the lawsuit be withdrawn, at least temporarily, in order to reconsider its position. Since then, the situation has remained uncertain, with Ripple continuing to sell XRP and fighting the SEC’s charges.
In the meantime, some important developments have occurred that could affect the outcome of the case.
First, the Commodity Futures Trading Commission (CFTC), another US government agency, has ruled that XRP is a commodity, that is, a commodity traded on a regulated market. This might suggest that XRP is not a security, but a digital currency as Ripple claims.
Second, some cryptocurrency exchanges have decided to stop offering XRP to their customers because of the lawsuit against Ripple. However, other exchanges have continued to offer XRP, showing that the digital currency still enjoys some popularity.
Finally, the SEC recently approved the appointment of Gary Gensler as the agency’s new chairman. Gensler is known to be an expert on cryptocurrencies and could bring greater clarity and regulation to the market, including the situation with Ripple.
However, it is currently unclear how Gensler will address the issue of XRP and its alleged security nature.
The complicated situation with the SEC
In general, the situation with the SEC and cryptocurrency companies remains in flux. While some companies have been able to resolve their disputes with the SEC and return to normalcy, others continue to struggle with charges and penalties.
The key question is whether cryptocurrencies should be considered financial securities and, therefore, be subject to the same market and regulatory rules as traditional stocks and bonds.
The SEC’s position seems to be that some cryptocurrencies can be considered financial securities and, therefore, must be registered with the SEC and comply with the rules applicable to securities.
However, there are different views on this issue, with some arguing that cryptocurrencies are simply digital assets and not financial securities.
The issue is particularly complex because cryptocurrencies are a relatively recent innovation, and existing laws and regulations were not designed to address the specific problems associated with cryptocurrencies.
There are also significant differences between different cryptocurrencies, with some functioning as digital currencies, others being used to create decentralized applications, and still others being used for initial fund raising (ICO).
What is certain is that regulation of the cryptocurrency industry is likely to become increasingly important over time.
With more and more companies operating in the cryptocurrency industry and more investors buying and selling cryptocurrencies, it is crucial to ensure that the industry is regulated in a fair and transparent manner to protect investors and ensure market stability.
However, it is also important to strike a balance between regulation and innovation. Cryptocurrencies were created precisely to offer a decentralized and independent alternative to traditional, over-regulated financial systems.
If regulators become too rigid and restrict innovation, they could prevent the development of promising technologies and new business models.
In conclusion, the situation with the SEC and cryptocurrency companies continues to be an important and evolving issue in the cryptocurrency industry.
While some companies have managed to resolve their legal problems and return to normalcy, others continue to struggle with charges and penalties.
In any case, regulation of the cryptocurrency industry remains an important and complex issue, with the need to strike a balance between regulation and innovation to ensure market stability and protect investors.