The SEC vs. Coinbase and Binance – what’s our take?
6th June 2023 |
If you’ve kept an eye on crypto news, or even just the regular financial news, you may have seen that the US Securities and Exchange Commission (SEC) is suing both (separately) Coinbase and Binance.
These are the two biggest crypto exchanges in the world. They are both crypto exchanges that we have written about extensively over the years as ways to buy, sell and trade crypto.
I haven’t read the full charges, and I don’t really intend to. Mainly because this stinks of a witch hunt by the SEC. I’ll get to more on that in a second. But the charges revolve around the exchanges being unregulated and selling unregistered securities, namely a few crypto such as Solana, Cosmos, Cardano, Filecoin and nine others.
Notably, the charges apparently don’t name Ethereum as an unregistered security, which is strange as the SEC refuses to comment on if it’s a security or not.
What makes this stink of a witch hunt is that the complaint against Coinbase flies in the face of Coinbase’s efforts to engage with the regulator. Coinbase has been a listed company on the Nasdaq since 2021, which means it’s adhered to stringent listing requirements and reporting, transparency and standards.
The timing of all this – coming into an election cycle – is not a coincidence. The Democrats have made a concerted effort to take aim at the crypto market and crypto investors as though they’re some kind of tax-dodging elite.
Both miss the mark by a wide margin.
The charges against Binance are equally capricious. The timing of it all says more than the trumped-up charges.
It is worth noting that both have made proactive attempts to engage with the regulators to ensure that they are operating in the correct manner. Coinbase has repeatedly asked for clarification and guidance, which the SEC refuses to give. Coinbase even sued the SEC to compel them to just do something regarding guidance and rules for crypto – the SEC countered that, saying it has years to decide what to do.
The point of it all is that the SEC is taking an aggressive and adversarial approach to crypto regulation in the US. And it’s driving businesses in the industry away from the US in droves. Another major exchange, Gemini, is said to be moving its entire operation to Europe or the UK for the more open and friendly approach.
So, what do I think about it all? Well, not much really. None of it is surprising coming out of the US. It has sent a bit of a shockwave through the market, with prices dropping about 5% which really isn’t more than a sneeze.
We don’t expect this to really do anything to the wider market, adoption or the long-term future of the crypto markets. If the US goes full-send on the aggression and regulation, it will just move things elsewhere. If anything, it will likely end up benefiting the UK and attract more crypto-related businesses to Europe and the UK.
As for the exchanges themselves? Well, again, there’s no big deal there. You can still use them, there’s nothing illegal about it, nothing wrong with it – we’re not in the US and the operations of both exchanges in the UK are just fine.
It is another reminder to not keep your crypto on exchanges. In the event that these were forcibly shut down, or something was afoot, and access to the exchanges were shut off, you wouldn’t want to have your assets on there. But I’ve never advocated keeping your crypto assets on exchange anyway, so it’s no real impact to us or to you.
Overall, it’s another blip on the radar, but nothing to worry about. The market has seen worse and survived worse. Even if both Coinbase and Binance were for some unforeseeable reason to shut down (which I absolutely don’t expect) then the market would still be fine.
In the immortal words of Lauren Cooper (a character played by Catherine Tate) …
Regards,
Sam Volkering
Co-editor, Frontier Tech Investor
