• The U.S. SEC has recently taken action against Binance, labeling several popular crypto assets as unregistered securities.
• Popular tokens like ADA, SOL, and MATIC could face delisting from U.S.-based exchanges due to the SEC’s classification of them as unregistered securities.
• These enforcement efforts by the SEC puts significant pressure on U.S.-based exchanges to prioritize compliance over their trading volumes and vice versa or risk facing similar action.
The U.S. SEC Takes Action Against Binance
The U.S Securities and Exchange Commission (SEC) recently launched an enforcement action against Binance for mishandling customer funds and wash trading amongst other allegations in June 2023. This case sets itself apart due to the number and popularity of tokens identified by the SEC as unregistered securities such as BNB (BNB), Binance USD (BUSD), Solana (SOL), Cardano (ADA), Polygon (MATIC), Cosmos (ATOM), The Sandbox (SAND), Decentraland (MANA), Axie Infinity (AXS) and COTI (COTI).
Implications For Crypto Exchanges
This asset classification puts significant pressure on crypto exchanges based in the United States which have supported these tokens such as Coinbase and Kraken who had a market for ADA/USD which was ADA’s second-largest market per data from CoinMarketCap . Due to regulatory restrictions, these exchanges will now be forced to decide whether they prioritize compliance over their trading volumes or face similar action like what happened with XRP in 2021 when it faced a delisting from most US-based exchanges after its classification as an unregistered security by the SEC.
Compliance vs Trading Volumes
These enforcement efforts by the SEC makes it difficult for businesses to balance between prioritizing compliance with regulations or maintaining their trading volumes without running afoul of laws put in place by financial regulators across different countries especially those that are stricter than others such as the United States who has been particularly aggressive when it comes to regulation of cryptocurrencies within its borders since 2021 till date despite having made no clear stance regarding their legal status yet..
Increased Regulatory Pressure On Crypto Businesses
As seen with this recent case against Binance, there is an increasing trend of increased regulatory pressure being placed on crypto businesses operating within the US boundaries due to claims that some token offerings are not compliant with existing laws governing securities trading on traditional markets unlike Bitcoin which was given a pass after being declared a commodity instead of a security due to its decentralised nature..
Conclusion
All these cases point towards an inevitable conclusion – compliance is key for any cryptocurrency business looking to do business within US jurisdiction if they want to avoid being targeted by US regulators or risk facing similar legal repercussions like those faced by XRP holders earlier this year. It remains unclear how long this trend will last given that cryptocurrencies are still largely uncharted territory but until then investors should be wary of what kind of investments they make lest they fall foul of any regulations set forth by governmental agencies overseeing cryptocurrency activity in their respective jurisdictions