- SEC wants to revise its Binance lawsuit.
- Solana, Cardano, and Polygon are among those affected.
- SEC could have several reasons to do this.
The U.S. Securities and Exchange Commission (SEC) currently wields the most power over crypto assets. Notably, the agency often uses legal action to enforce its view, as recently seen in a lawsuit against Binance. Specifically, the lawsuit implicated ten crypto assets, including Solana, Cardano, and others, as unregistered securities, which could set a damaging legal precedent for the altcoins.ย
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Most recently, legal considerations have prompted the SEC to reassess this definition. The agency asked the court to amend the part of the lawsuit mentioning altcoins. The agency now seeks to avoid setting a legal precedent for whether or not altcoins are securities.
SEC Shifts Strategy On Altcoins in Binance Lawsuit
The latest development in the Binance lawsuit could significantly impact many of the biggest altcoins. On Thursday, July 30, the SEC filed a document revealing its plans to shift its legal strategy related to altcoins in the lawsuit. The agency proposed to amend a section about ten altcoins, including Solana, Cardano, and Polygon, claiming that these tokens are unregistered securities.
In the lawsuit, the exchange accused Binance of offering unregistered securities to its users. The original lawsuit specifically named ten tokens: SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI in its lawsuit. If the SECโs amendments are passed, the court would not have to rule on whether they are unregistered securities, avoiding setting a legal precedent.
At the time, the inclusions of these altcoins caused concern among their holders due to high regulatory risk. If the SEC designated major altcoins as unregistered securities, exchanges could not list these tokens for US customers. Seeing that most users still trade tokens on centralized exchanges, this would cause a major hit to their price.
Why the SEC is Shifting Strategies
The SECโs initial broad application of securities law to various cryptocurrencies faced significant legal challenges and criticisms from the crypto industry and legal experts. These challenges highlighted the difficulty in applying traditional securities law frameworks to decentralized digital assets.
In the Binance lawsuit, the SECโs original case could set a legal precedent on whether or not altcoins like SOL and ADA could be considered securities. By amending the section on altcoins, the SEC is likely looking to avoid setting a legal precedent in this specific case.
As noted by crypto insiders, this does not mean the SEC is changing its view on altcoins. Rather, the SEC may wait for a clearer case for a legal precedent. One possible case, highlighted by 0xgaut, is the one against Coinbase.
On the Flipside
- Many in the crypto community saw this filing as a signal that the SEC is changing its perspective on altcoins. However, the filing itself is insufficient proof for this conclusion.
- Current SEC Chair Gary Gensler has been consistent in his view that most crypto assets are securities. Bitcoin and a few other coins are the only exceptions.
Why This Matters
The Binance lawsuit could set a precedent for whether or not most crypto can be traded in the US on centralized exchanges. This precedent would significantly impact the markets for these tokens.
Read more about the SEC Chairโs stance on altcoins:
Gary Gensler: Is the SEC Chair Cryptocurrencyโs Greatest Threat?
Read more about Crypto.comโs latest marketing push:
Crypto.com Joins Forces With Abu Dhabiโs Combat Club to Bring Mainstream Audience to Crypto
