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Crypto.com has sued the U.S. Securities and Exchange Commission, accusing the agency of overreaching regulatory practices and threatening the stability of the U.S. crypto industry.
Crypto.com Takes Legal Action Against SEC to Defend US Crypto Industry
Legal action has been taken by Crypto.com, a prominent cryptocurrency exchange and service provider, against the US Securities and Exchange Commission in an effort to safeguard the future of the US crypto business.
The official announcement that Crypto.com has sued the US SEC was made by Kris Marszalek, co-founder and CEO, on October 8th, via X.
SEC's Enforcement Hurts Millions of US Crypto Holders
“This unprecedented action by our company against a federal agency is a warranted response to the SEC’s regulation by enforcement regime, which has hurt more than 50 million American crypto holders,” he stated.
“We are doing so to protect the future of the crypto industry in the US, joining a series of our peers who are actively defending themselves and taking action against a misguided federal agency acting beyond its authorization under the law,” states the official announcement from Crypto.com.
Crypto.com Calls for Stability Through Proper Regulation
Marszalek further pledged that the corporation will employ "all regulatory tools available" to ensure the industry's stability through appropriate rulemaking. Furthermore, Crypto.com has asked the SEC and the US Commodity Futures Trading Commission to verify the classification of crypto derivative products.
The release by Crypto.com mentioned that the company's complaint against the SEC is in response to the commission's Wells notice.
SEC's Overreach Criticized as Industry Faces Uncertainty
According to the exchange, the SEC's action "illustrates that the SEC’s unauthorized and unjust regulation by enforcement campaign continues despite bipartisan indications that the next Administration will take a more constructive and effective approach."
As stated by Crypto.com:
“For now, improper SEC enforcement actions are part of the process of operating a legitimate and licensed crypto business in the US. While this is an unprecedented move for our company to file suit against a federal agency, actions by that agency towards our industry have left us no other choice.”
Crypto.com Demands Joint Regulation of Derivatives by SEC and CFTC
"Unilaterally expanded its jurisdiction beyond statutory limits" is the central argument of Crypto.com's complaint against the SEC.
Another contention advanced by the exchange was that the SEC had "established an unlawful rule that trades in nearly all crypto assets are securities transactions no matter how they are sold."
"It is business as usual" at Crypto.com, the site maintains, as it persists in its "pursuit of crypto in every wallet." This is in spite of the fact that the SEC has served it a Wells notice.
CFTC and SEC Joint Rulemaking Sought for Clarification
To further establish that specific bitcoin derivative products are "solely regulated by the CFTC," Crypto.com petitioned the SEC and CFTC to jointly interpret the statute.
By referencing the Dodd-Frank Act's joint rulemaking, Crypto.com emphasized that the CFTC and SEC are open to inquiries from any market player regarding the classification of a product as a "swap," a "security-based swap," or a "mixed swap."
"Under these joint rules, the agencies have 120 days to either issue a jointly approved interpretation or to deny an interpretation," Crypto.com said.
Crypto.com Highlights Potential Impact on Future Regulations
According to Cointelegraph, if authorities refuse to grant the proposed interpretation, they should explain why.
"The agencies must consult with the Federal Reserve Board of Governors and can also engage in joint rulemaking in consultation with the Fed," Crypto.com further stated.
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