In a recent development that underscores the increasing tension between cryptocurrency platforms and regulatory bodies, Crypto.com has found itself in the crosshairs of the U.S. Securities and Exchange Commission (SEC). The SEC has been intensifying its regulatory scrutiny, employing a strategy often described as regulation-by-enforcement. Crypto.com joins a growing list of trading platforms, such as Robinhood, that have faced similar scrutiny over the past year.
Crypto.com Accuses SEC of Overreach
Crypto.com has taken a bold step by filing a lawsuit against the SEC, following the receipt of a Wells Notice. The company asserts that this legal action is essential for the protection of the cryptocurrency industry’s future within the United States. In its official statement, Crypto.com emphasized the necessity of defending against what it describes as a federal agency acting beyond its authorized powers.
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The primary argument presented by Crypto.com is that the SEC is overstepping its jurisdiction. The exchange claims that the SEC has unilaterally expanded its authority to classify nearly all cryptocurrency transactions as securities, with the notable exceptions of Bitcoin (BTC) and Ethereum (ETH). Crypto.com contends that this distinction lacks a solid legal foundation and ignores essential regulatory procedures, such as the notice-and-comment rule mandated by the Administrative Procedure Act.
The exchange further argues that the SEC’s enforcement actions are “arbitrary and capricious.” This is particularly concerning given that many cryptocurrencies share similar characteristics and transactional methods with BTC and ETH. Crypto.com seeks to halt what it perceives as the SEC’s unlawful activities, which it believes exceed the agency’s statutory authority and violate federal law.
Push for CFTC Oversight of Crypto Derivatives
In addition to its legal challenge against the SEC, Crypto.com is actively pursuing a change in the regulatory framework for cryptocurrency derivatives. Crypto.com | Derivatives North America (CDNA) has filed a petition with both the SEC and the Commodity Futures Trading Commission (CFTC). This petition seeks to clarify the regulatory oversight of certain cryptocurrency derivative products, advocating for these products to be designated solely under the jurisdiction of the CFTC.
The petition requests a joint interpretation from the agencies involved, and they have been given a 120-day window to respond. They can either issue a jointly approved interpretation or provide written reasons for any denial of the petition. This move by Crypto.com reflects a broader industry push for clearer and more consistent regulatory guidelines, which many believe are essential for the healthy development of the cryptocurrency market.
Cronos (CRO) Price Movement
Amid these regulatory challenges, Crypto.com’s ecosystem token, Cronos (CRO), has experienced a downturn. At the time of this writing, CRO is trading at $0.075, reflecting a 5% decrease within the last hour. This price movement highlights the volatility often associated with cryptocurrency markets, particularly in times of regulatory uncertainty.
