Key Points
- The SEC has amended its lawsuit against Binance, dropping claims that several popular cryptocurrencies, including Solana, Cardano, and Polygon, are securities. This move significantly alters the regulatory landscape for these digital assets.
- The decision comes amid shifting political attitudes towards cryptocurrency in the U.S., with Republican and Democratic parties showing increased interest in adopting crypto-friendly stances ahead of upcoming elections.
SEC Amends Lawsuit Against Binance
In a significant development in the ongoing legal battle between the U.S. Securities and Exchange Commission (SEC) and Binance, the world’s largest cryptocurrency exchange by trading volume, the SEC has amended its lawsuit, dropping claims that several popular cryptocurrencies are securities.
The SEC filed a response to the court’s minute order on July 30, 2024, stating its intention to amend the complaint regarding the “Third Party Crypto Asset Securities” defined in its opposition to Binance’s motion to dismiss. This move effectively removes the need for a court ruling on whether these tokens should be classified as securities.
Background of the Lawsuit
The original lawsuit, filed last summer, alleged that Binance, Binance.US, and former CEO Changpeng Zhao provided unregistered broker, trading, and clearing services in the U.S. for digital asset securities. The SEC had initially categorized several cryptocurrencies as securities, including Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos (ATOM), The Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS), and Coti (COTI).
Implications for the Crypto Industry
This amendment will likely alter these classifications and significantly affect the crypto industry. The tokens affected by this decision represent a substantial portion of the cryptocurrency market, with the SEC previously claiming at least 68 tokens as securities, impacting over $100 billion worth of cryptocurrencies.
Shifting Political Landscape
The SEC’s decision to back down on these claims comes amid a shifting landscape in U.S. crypto regulation and politics. Presidential candidates are increasingly attempting to win over pro-crypto voters. Former President Donald Trump recently pledged to end the “war on crypto” as part of his election campaign, promising to fire SEC Chair Gary Gensler and appoint a crypto-friendly advisory council if elected.
On the Democratic side, party members in the U.S. House of Representatives have called for a “forward-looking approach” to blockchain and digital assets. In response, advisers to Vice President Kamala Harris have reportedly reached out to crypto companies to repair the party’s relationship with the industry.
Previous Legal Developments
This development follows a June 2023 ruling by a U.S. federal court that cryptocurrencies and secondary sales of the BNB token do not qualify as securities. Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia stated that the case should not be interpreted as deciding whether crypto assets are securities.
Market Reaction and Future Outlook
The crypto market has reacted to this news, with SOL, ADA, and MATIC experiencing slight declines of 2% to 6% in the 24 hours following the announcement. However, the long-term implications of this amendment on the broader cryptocurrency market and regulatory landscape remain to be seen.
As the legal proceedings continue, the crypto industry and investors will closely watch for further developments in the SEC’s approach to cryptocurrency regulation and classification.
