US authorities have begun a fundamental review of the regulation of crypto platforms

Lawsuits by the US financial regulator, the Securities and Exchange Commission, filed against two leading crypto exchanges – Binance and Coinbase, caused a noticeable reaction in the global cryptocurrency market. Now its participants and experts are arguing how large-scale the reform of the regulation of the cryptocurrency market can be caused by the claims of the US authorities to the leading crypto exchanges.

The events of the past few days have led to a noticeable commotion in the cryptocurrency market, which is already going through difficult times. RecallLast Monday, June 5, the US Securities and Exchange Commission (SEC) filed a lawsuit against the world’s largest cryptocurrency exchange Binance and its founder Changpeng Zhao, accusing them of violating US law on 13 counts.

But if the lawsuits against Binance in recent months go one by one, then yesterday lawsuit the same SEC, now against the largest US cryptocurrency platform Coinbase, seriously alarmed the market. bitcoin rate fell by 5%, and investors brought out with crypto exchanges Binance and Binance.US over $790 million.

Some mass media there has already been talk that the SEC allegations could mean the “last breath” for the cryptocurrency market.

The fact is that the SEC accused Binance and Coinbase of carrying out exchange activities in the United States without obtaining an appropriate license. However, these platforms have been trading cryptocurrencies and assets tied to them for many years and do it quite openly, and the regulator has only just now raised questions about the license.

“Coinbase founder Brian Armstrong has been asking the SEC for a long time to understand the clear rules of operation, and followed the existing rules as much as possible,” said in an interview. The Wall Street Journal one of the first investors of this exchange, Adam Draper. “He was never opposed to the authorities.”

Experts note that it was Coinbase that initially took the most conservative position in what assets to trade. So, during the next cryptocurrency boom in 2017, it traded only bitcoin and a few other assets that were already widely recognized around the world, refraining from trading more niche and risky assets. But as other major crypto exchanges such as FTX or Binance expanded, Coinbase has also expanded its range of services and now trades approximately 240 crypto assets.

Now, the SEC is accusing Coinbase of trading at least 13 assets that it needed to obtain a securities trading license to trade in.

Similar situation observed in the United States a decade ago, when the US Treasury responded to the rise in popularity of cryptocurrencies, which by then were traded on the free market, but without strict regulations, licenses or disclosures. In March 2013, the Ministry of Finance issued management, in which cryptocurrencies were essentially equated with conventional payment systems and, thus, they were subject to requirements for the disclosure of information about payments to combat money laundering and other financial crimes. After that, regulators of other countries turned their attention to cryptocurrencies, which began to either develop regulatory standards for them, or simply prohibit trading in them.

However, over the past years, the rate of development of the crypto market has often overtaken the development of regulatory norms. Now market participants are saying that regulators themselves would do well to bring more clarity to the regulation of crypto asset trading.

“The SEC doesn’t write laws, it only makes accusations. We are confident that the courts will prove wrong Gary Gensler (Chairman of the SEC), – said yesterday the head Blockchain Association Kristin Smith — Contrary to Gensler’s assertions, there is still not enough clarity in the regulation of digital assets — this has already been said at two meetings of relevant committees of Congress. The Blockchain Association is ready to defend the rights of our members and the entire crypto industry, defending itself both in Congress and in the courts.”

Now the court will find out the validity of the SEC claims against crypto exchanges. “Whatever the decision of the court, it will become one of the most significant in the history of the cryptocurrency market,” Mr. Draper believes.

Evgeniy Khvostik