The recent lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against Binance Holdings Ltd. has sent shockwaves through the cryptocurrency market, with potential ramifications for other American exchanges.
Coinbase, Kraken, and others now face the difficult decision of whether to delist numerous tokens as the SEC’s regulatory crackdown intensifies.
The SEC’s lawsuit, which emerged on Monday, identified a dozen digital tokens as unregistered securities, subjecting them to stringent investor protection regulations.
The agency’s move adds over $115 billion worth of crypto assets to its list of targeted tokens, with Binance’s BNB, stablecoin BUSD, Cardano’s ADA, Solana’s SOL, Polygon’s MATIC, Filecoin’s FIL, and Algorand’s ALGO among those specifically mentioned.
When combined with previously targeted tokens like XRP, the SEC now considers a staggering $115 billion worth of coins as unregistered securities.
SEC Chair Gary Gensler has consistently maintained that most tokens fall under the agency’s investor-protection laws and has advocated for trading platforms to register with the regulator.
However, the designation of specific tokens represents a more stringent approach. This year, U.S. officials have intensified their crackdown on digital assets, prompted by the market turmoil of 2022 and various high-profile failures, including the bankruptcy of the FTX exchange.
Binance Vs. SEC: Coinbase, Kraken, & Others Grapple With Delisting Decision
The fallout from the SEC’s actions is expected to hit Coinbase, Kraken, and other U.S.-based exchanges the hardest. Jeff Dorman, Chief Investment Officer at Arca, a digital-asset specialist, highlighted the dilemma these exchanges now face, stating:
Who actually gets hurt by this is Coinbase, Kraken, and other US-based exchanges, who then have to make a decision on whether to delist.
The risk of delisting also threatens U.S. market makers, potentially causing them to cease market-making activities for tokens designated as securities.
Although the SEC’s lawsuit has already impacted token prices, resulting in losses across various assets, experts like Dorman predict that the long-term effect on prices will be minimal as these tokens continue to be traded on offshore exchanges.
Berenberg analyst Mark Palmer suggests that the SEC’s lawsuit against Binance could serve as a preview of future actions against Coinbase. Drawing parallels between the Binance case and previous lawsuits filed against Bittrex and Kraken, Palmer believes that Coinbase may be next in line to face regulatory scrutiny.
In light of these developments, the crypto industry anxiously awaits further updates as the SEC’s lawsuit against Binance sends shockwaves through the market, potentially reshaping the landscape for U.S. exchanges and investors alike.
Related Reading | Tether Joins ‘Volcano Energy’ To Power El Salvador’s Renewable Future