Crypto.com sued the US securities watchdog for allegedly overstepping its mandate. The crypto exchange claims the Securities and Exchange Commission (SEC) has extended its jurisdiction beyond statutory limits by interpreting crypto assets as securities.
This lawsuit reportedly followed a Wells notice by the regulator against the company. In its statement, the exchange argued that the SEC had imposed an unlawful rule categorizing most crypto transactions as securities, while transactions involving Bitcoin and Ether escape this classification.
Crypto Regulations
In addition to the lawsuit, Crypto.com Derivatives North America (CDNA) petitioned the Commodity Futures Trading Commission (CFTC) and the SEC for clarification on the regulation of certain cryptocurrency derivative products. Crypto.com maintains that the regulator's distinction lacks a foundation in law and ignores the similarities between these assets.
“Specifically, our lawsuit contends that the SEC has unilaterally expanded its jurisdiction beyond statutory limits and separately that the SEC has established an unlawful rule that trades in nearly all crypto assets are securities transactions no matter how they are sold, whereas identical transactions in Bitcoin and Ether are somehow not,”Crypto.com explained.
The petition seeks to confirm that these products fall exclusively under the jurisdiction of the CFTC. The company highlighted the Dodd-Frank Act, a regulation that facilitates joint interpretations between regulatory bodies.
SEC to Respond
Under the joint rules, the CFTC and SEC have 120 days to respond to the petition, either by issuing an interpretation or providing written justification for denial. This process is designed to enhance regulatory clarity for market participants.
In June, Coinbase, another major crypto exchange, filed a lawsuit against the SEC and the Federal Deposit Insurance Corporation (FDIC). The lawsuits claimed that both agencies failed to fulfill Freedom of Information Act (FOIA) requests submitted to the US District Court for the District of Columbia.
The filed case mentioned that the two regulators did not provide the requested information under the Act, thus undermining the transparency in regulatory dealings. Coinbase also faulted the agencies for actions perceived as attempting to marginalize the cryptocurrency industry within the banking sector.
This article was written by Jared Kirui at www.financemagnates.com.
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