In addition to Coinbase, there are many other platforms under the eyes of the SEC.

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We were aware of the odious relationship between Coinbase and the Securities and Exchange Commission (SEC). Now the source claims that not only is the Californian platform in the police field of view of the US stock market. In fact, all the exchanges that exist in the United States will be studied.

Coinbase, FTX, Binance … all are targeted by the SEC

The revelations collected by Forbes come from anonymous partner of Senator Cynthia Lummis, Republican Party member and elected by Wyoming. According to this source, all the exchanges are already being studied, each at “different stages” of progress.

An important detail: Coinbase is not the only platform that will be targeted by the attack, as the US division of Binance (the No. 1 platform for daily trading volume) will also fall under the eyes of the regulator.

No information has been provided on the nature of the items brought against each platform, but it is certain that the files share similarities in content.

On July 26, the SEC publicly announced that it would launch an investigation into Coinbase. The study aims to determine if the 150 digital assets Coinbase offers its customers are eligible. category of goods and materials sold (“Goods”) or securities and transferable securities (“Securities”).

Commodities and stocks: the difference at the heart of the SEC-Stock Exchange comparison

This distinction is important because it will cause all Coinbase (and therefore all exchanges) to be reclassified as a broker. With the obligation to register with the SEC, which will thus regulate their activities.

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An opportunity that Coinbase rejects for at least two reasons.

First, whythe compliance procedure will be very expensiveboth in the annual budget and in human resources, not to mention the impact of administrative inertia this will have on its operations.

Hence, why the platform believes SEC practices and the securities regulatory framework are incompatible with cryptocurrencies.

Coinbase Legal Director Paul Grewal even forked the article a few days before the announcement. blog particularly vindictive tone:

Coinbase does not offer stocks on its platform. End of the story.

Bitcoin and Ethereum in the Commodity category

The debate between commodities and stocks is not new, and we find it at the center of another case, the dispute between the SEC and the Ripple project (XRP).

Again, the SEC believes that XRP will effectively be a financial instrument in disguise intended to raise money for the company and is of no use. One aspect that distinguishes it from Bitcoin (BTC) and Ethereum (ETH).

The SEC filing revolves around the fact that BTC and ETH will be released to reward validators on their respective networks. Therefore, the issuance of tokens is never controlled by a single player. Therefore, in these projects, decentralization would be real and undeniable.

Instead, XRP would be created at the initiative of Ripple executives and distributed among team members. So it’s 100 billion XRPs that would have been created ex nihilo without a clear counterpart and most of which would still be in the hands of Ripple’s leaders. The process is similar to issuing shares.

The famous Howie test

To cut the Gordian knot, the Securities and Exchange Commission uses the famous Howey test, which dates back to … 1946.

This test is based on four criteria to determine whether an asset is in a basket of financial instruments:

  • The contract is based on investments,
  • The buyer expects to receive return on your investment Departure,
  • Amounts collected through the sale of contracts merged into a single company,
  • The expected profit comes from Activities carried out by this company.
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A very broad definition!

So, on paper, the vast majority of cryptocurrencies on the market will be reclassified as financial instruments after being subjected to ICO and that most of the chips will still be in the hands of the teams.

Cryptocurrency platforms favor CFTC over SEC

IN THE USA, SEC regulated financial instrumentsgoodbye Commodities are regulated by the Commodity Futures Trading Commission (CFTC).

Recently, the CFTC has publicly expressed an interest in taking over oversight of U.S. cryptocurrency markets outside its current scope, including bitcoin CME and ethereum futures.

A decision that clearly appealed to several platforms, starting with FTX, whose CEO Sam Bankman-Fried pushed hard to get it. The reaction of Coinbase CEO Brian Armstrong also did not go unnoticed:

We need clear and consistent rules to regulate the cryptocurrency industry in the United States. It’s nice to see politicians on both sides of the aisle working to bring clarity. https://t.co/N2YvbYagkI

– Brian Armstrong – barmstrong.eth (@brian_armstrong) August 4, 2022

To learn more about the lawsuit between the SEC and Ripple executives: read our article.

To learn more about the SEC’s investigation into Coinbase, read our article.

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