Binance Gains Support from US Chamber of Digital Commerce in SEC Dispute

Leading cryptocurrency exchange Binance recently faced charges from the U.S. Securities and Exchange Commission (SEC) concerning securities violations. Stepping up to support Binance is the US Chamber of Digital Commerce, a notable crypto advocacy group.

On Thursday, the advocacy group submitted an amicus brief asserting that the SEC’s approach towards crypto assets is fundamentally flawed. They argue that the SEC’s current stance might deter financial innovation and potentially push crypto startups out of the U.S., due to an unfavorable regulatory atmosphere.

Highlighting the SEC’s misunderstanding, the group stated in their brief, “the SEC is suing the equivalent of a grocery store selling oranges and other fruit, or an online e-commerce marketplace, like Amazon.” They emphasized, “Tokens alone are not securities, and the markets where they are available to buy and sell are not securities exchanges.”

Ever since Gary Gensler took over as the SEC’s chair, the Commission has intensified its enforcement actions. Prominent crypto exchanges like Binance, Coinbase, and Kraken have found themselves under scrutiny this year. Accusations directed towards these platforms range from offering unregistered staking products to listing tokens that purportedly violate securities regulations. In defense, exchanges like Coinbase assert that the guidelines determining which cryptocurrencies are deemed securities remain ambiguous.

The Chamber of Digital Commerce believes the SEC fails to differentiate between “the subject of an investment-contract security” and “the investment contract itself”. This blurred distinction, they argue, leads to misclassification of various crypto tokens as unregistered securities. In their brief, the Chamber pinpointed, “The SEC has adopted a regulation-by-enforcement approach, arbitrarily categorizing various blockchain-based digital assets as securities.”

In a related development, the SEC’s attempt to categorize XRP sales by Ripple as unregistered security offerings was not entirely successful in a federal court. While the SEC withdrew its charges against Ripple executives, it continues to challenge allegations against the company.