There will be no escaping Uncle Sam’s wide sweeping net of crypto regulation according to staff from Senator Cynthia Lummis’ office.
The U.S. Securities and Exchange Commission is investigating Coinbase, the country’s largest exchange, and has also set its sights on global giant Binance according to Lummis office staff.
Both Coinbase and Binance have bent over backward to appease regulators with the latter operating a separate division (Binance.US) with limited services to American customers.
Apparently, this is still not enough for the SEC, whereas the more crypto-friendly regulator, the Commodity Futures Trading Commission (CFTC), is more likely to adopt an approach that is not based on enforcement and lawsuits.
Every U.S. crypto exchange is in various stages of being investigated by the SEC said staff, according to a Forbes report on Aug. 4.
Cryptocurrencies are not securities…yet
Nevertheless, crypto assets have yet to be officially classified as securities so the SEC is technically operating beyond its jurisdiction.
This was alluded to by Republican Senator Tom Emmer who said last month that the agency and its anti-crypto chair Gary Gensler were “hellbent on expanding the size of its crypto enforcement division using enforcement to unconstitutionally expand its jurisdiction.”
There is a ray of hope, however, as the SEC urgently wants to resolve its dispute with the CFTC over crypto jurisdiction, according to the official who was not named.
“If the matter isn’t resolved internally, legislators would have to get involved, and that Congress is likely to side with the CFTC,” he said.
Two bills have been introduced recently to give the CFTC more jurisdiction over cryptocurrencies, however, the official said that there was less than a 50% chance of either being passed this year. The Lummis-Gillibrand bill was submitted on June 7, and the Digital Commodities Consumer Protection Act was announced this week.
According to one crypto exchange executive, many U.S. exchanges have likely received Wells Notices from the SEC as part of its enforcement drive. These are used to formally inform the companies when action is about to be taken against them. The unnamed executive also said that these instances are separate from standard SEC procedures.
The battle for regulatory control over crypto in America rages on and it is unlikely to be concluded any time soon which only serves to prolong the uncertainty for companies trying to comply.