The US Securities and Exchange Commission (SEC) has taken action against two leading global crypto exchanges, Coinbase and Binance, filing a series of charges that will have a considerable impact on the evolution of cryptocurrencies. In light of this, JPMorgan has released a research report exploring the potential implications of this legal conflict on the formation of US crypto regulations.
JP Morgan’s research report, titled ‘Shaping Future Crypto Regulations Amidst SEC Lawsuits and Legal Ambiguity’, examines the possible shape of future crypto regulations in the US. The SEC has taken the stance that most cryptocurrencies should be categorized as securities and, therefore, subject to existing regulatory frameworks. However, the lack of clear legal guidance in this regard is highlighted by the ongoing Ripple case.
The SEC lawsuits against Binance and Coinbase demonstrate the urgent need for US legislators to implement a comprehensive regulatory framework this year. Without such regulations, crypto activities are likely to continue migrating to decentralized entities, while venture capital funding for crypto projects will remain subdued.
If the SEC’s stance is adopted by lawmakers, US crypto exchanges like Coinbase and Binance.US would be required to register as brokers and most cryptocurrencies would be treated as securities. Introducing such regulations would bring about increased transparency and improved investor protection in crypto markets. Additionally, the bank claims that the uncertainty surrounding certain layer 1 tokens could benefit established cryptocurrencies like Bitcoin and Ether.
