It's no surprise that cryptocurrencies are facing scrutiny from US federal regulators. It's a pattern we've seen before with other disruptive and transformative technologies, from electricity to the internet.
But the US Securities and Exchange Commission (SEC) charges this week against cryptocurrency exchange Binance Holdings and separate charges against digital asset exchange Coinbase Global
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they threaten to undermine the United States' ability to be a frontrunner, or even a competitor, in the revolutionary arena of cryptocurrency and the financial freedom it grants its users.
The SEC filed Monday 13 charges against Binance, one of the world's largest cryptocurrency exchanges, and its CEO, Changpeng Zhao, also known as CZ. He lawsuit includes accusations that Binance artificially inflated trading volumes, misled investors, and failed to restrict US clients from its platform.
On Tuesday, the SEC targeted world coinbase, the popular cryptocurrency exchange. regulators charged cryptocurrency exchange with the illegal offer of exchange, brokerage, clearing and participation services.
These latest actions are further testament to the SEC's relentless drive to kill off the burgeoning world of cryptocurrency in the US. As the dust begins to settle, key questions arise: Can Binance stop the run on the bank that often follow such accusations? How will the market react to this direct attack on cryptocurrencies? Finally, given the extreme regulatory uncertainty, what does the future hold for cryptocurrencies?
Considering the possible bank run, Marija Matiฤ from Weiss Ratings revealed that despite the serious allegations, less than 2% of BTC from Binance's exchange reserves had been withdrawn within five hours of the news. Based on Coinglass data, this is a tepid reaction compared to the response FTX received in a similar situation. He indicates that the crypto community can have confidence in Binance's ability to handle this crisis, at least in the short term.
Adding another layer of complexity, the SEC claimed that Binance's native BNB token and its BUSD stablecoin are unregistered securities. This casts doubt on the future of 12 other cryptocurrencies, with a combined value of $86 billion. It also alleged that several other assets on Binance's platforms are unregistered securities, including Solana.
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Cardano
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and polygon
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In particular, Ethereum
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it was not listed by the SEC, which might be a relief for ETH enthusiasts. However, Matiฤ cautions against celebrating too early, as the reasons for listing tokens as securities could apply to most tokens in the Ethereum ecosystem.
The criteria used by the SEC seem diverse and, in some cases, may seem excessive. The routine activities of many cryptocurrencies (raising funds through token sales for ecosystem development, providing updates on the growth and development of the network on a blog, announcing public listings, and making certain promotional claims) have been flagged. like problems.
Matiฤ suggests that such a broad standard could be applied to almost any cryptocurrency and raises questions about the specific selection of coins being sued.
Despite the current uncertainties, the resilience of the crypto industry, as evidenced by its history, could provide support. Previous instances where Binance temporarily halted trading or announced its exit from Canada, for example, led to initial panic and subsequent crashes in bitcoin.
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prices. However, rapid rallies followed declines, demonstrating the market's ability to recover.
โ Traditional finance has overcome similar legal challenges, and the cryptocurrency industry can do the same. โ
Like Graeme Moore's polymer mesh He noted, lawsuits from US financial regulators, like the one Binance is currently facing, are not uncommon. Traditional finance has overcome similar legal challenges, and the cryptocurrency industry can do the same. In his words, these challenges, while significant, simply represent necessary hurdles on the path to industry evolution.
While recent developments suggest a potential turning point in the history of cryptocurrency in the US, Gabriella Kusz, CEO of the Global Association for Digital Assets and Cryptocurrenciespoints out that the crypto industry extends well beyond the borders of the US. Despite regulatory hurdles in one country, the industry continues to thrive globally.
Kusz also drew attention to another interesting pattern in the market's response to regulatory actions. These events appear to drive capital from less defined digital assets (altcoins) to bitcoin, strengthening its position within the crypto landscape. The recent allegations against Binance could further catalyze this trend in the future.
What does the future hold for cryptocurrencies? In a climate of uncertainty and regulation, cryptocurrencies are at a turning point. However, Binance's response to the situation thus far suggests that faith in the crypto market and its leaders remains strong. In fact, these challenges may serve to catalyze its evolution, leading it to become more transparent and ultimately more resilient.
Further: The six wildest accusations the SEC is making against Binance
Further: 'Maybe you're to blame': Amid SEC blitz, defiant crypto founders.
Also read: Coinbase CEO: Crypto's Future Is A Matter Of National Security
