Coinbase and Ripple Labs cite Binance case ruling, call for the establishment of cryptocurrency regulations.
Following a judge's rejection of some of the U.S. Securities and Exchange Commission (SEC)'s claims against Binance, Coinbase and Ripple have seized upon this ruling to emphasize the regulatory uncertainty surrounding cryptocurrencies. They are urging the SEC to establish clear rules and define which types of token sales are considered legal.
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Summary of the Situation
Last Friday, U.S. Federal Judge Amy Jackson ruled to approve most of the U.S. Securities and Exchange Commission (SEC)'s allegations against the exchange Binance.US, while rejecting some crucial ones:
- The issuance and sale of the stablecoin BUSD involve securities sales
- The secondary market sale of the platform token BNB involves securities sales
- The Earn service Simple Earn involves securities sales
In other words, the SEC's claim that Binance engaged in securities sales of the platform token BNB in the secondary market has been rejected, which is undoubtedly a significant victory for the crypto industry.
As predicted by FOX crypto journalist Eleanor Terrett in a tweet, many crypto companies currently in litigation with the SEC may cite this ruling on "investment contracts" to strengthen their positions in the lawsuits.
Binance.US Faces SEC Lawsuit: Most Charges Approved by Judge, Only BUSD and Earn Service Not Deemed Investment Contracts
Coinbase: Regulatory Uncertainty, Call for Rulemaking
In response, the U.S. exchange Coinbase indeed referenced and criticized the current regulatory uncertainty in the crypto industry regarding this case:
Due to the SEC's continued adoption of the broad but uncertain "crypto equals securities" perspective, Binance further supports the SEC in rulemaking for the crypto industry, aligning with Coinbase's similar call.
Additionally, "The SEC's perspective has never been fully explained, but the commission is attempting to retroactively impose on the digital asset space through an enforcement blitz."
Binance.US Responds to SEC Lawsuit: SEC Lacks Evidence, Unclear Regulation Makes Compliance Difficult
On the other hand, Coinbase also disagrees with the judge in the Binance case, as mentioned in a court filing submitted yesterday:
Judge Jackson's opinion exacerbates the confusion caused by the SEC in this industry, and the ruling in the Binance case indicates that the court should compel the SEC to start rulemaking.
Previously, the company did petition the SEC on this matter, requesting the establishment of crypto-specific laws, but was rejected at the end of last year.
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Furthermore, in a document submitted by Coinbase on Monday here, reference to the Binance case was also made, hoping to use it to counter the SEC's allegations of operating as an unregistered broker-dealer:
This underscores the urgent need for crypto-specific legislation and review to clarify securities laws and provide market participants with regulatory guidance.
Ripple: Case-by-Case Regulation Not the Solution
Meanwhile, crypto payment company Ripple Labs, in a "supplemental authority" submission on Tuesday, cited Judge Jackson's ruling that stablecoin BUSD and BNB secondary sales are not securities:
Not all cryptocurrencies fit the Howey Test, and regulating the crypto industry on a case-by-case basis may not be an efficient approach.
Ripple Labs emphasizes that the court should clearly define which types of XRP sales are legal:
The judge's ruling supports our argument that the court needs to provide clear guidance on the legality of different types of XRP sales, which is one of the most important issues throughout the entire ruling process.
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Currently, the SEC's cases against Coinbase, Ripple Labs, and Binance are still ongoing, with the Binance case court hearing scheduled for July 9.