SEC lawsuits against cryptocurrency companies raise questions about industry’s future

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The SEC filed lawsuits last week against the world’s biggest cryptocurrency exchanges, Binance and Coinbase, deepening tensions between the government and a volatile industry that has been marred by scandals and market meltdowns

First came the crypto winter, then the alleged fraud wrought by FTX founder Sam Bankman-Fried, and now the lawsuits.

The lawsuits are the latest in an ongoing tussle between government officials who describe the crypto industry as the “ Wild West,” and creators of digital assets who seek to legitimize cryptocurrency as a currency of the future. What results from the legal battle could greatly diminish the growth of the crypto industry or, alternatively, restrict the scope of the SEC’s regulatory authority.

The crypto industry already knew it was under a tough spotlight from Washington’s regulators and politicians. The collapse of crypto prices last year as well as the demise of several notable crypto companies – including FTX – exposed investors to billions of dollars in losses. Gensler had repeatedly stated, both to Congress and in public appearances, that he believes the SEC has more than enough authority to regulate the industry.

Yellen said Wednesday that she sees “some holes in the system where additional regulation I think would be appropriate and we would like to work with Congress to see additional legislation passed.” Their discussion draft of legislation seeks to delineate agencies’ jurisdiction over certain digital assets and “strike the appropriate balance between consumer protection and encouraging responsible innovation,” McHenry said in a news release.

 

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