Recently, the Binance crypto platform and the US Department of Justice (DOJ) reached an agreement to drop investigations against the company. It turns out that, curiously, the Securities and Exchange Commission (SEC) was not a party to the deal. According to some analysts, this posture is anything but innocent.
Absence of the SEC in the Binance-DOJ agreement, to create a legal precedent
The absence of the SEC in the recent $4.3 billion settlement with Binance turns out to be a strategic decision. This is in any case the point of view of certain analysts for whom the position of the financial regulator is part of a very precise logic.
It is, according to them,a politic allowing the regulatory body to maintain strong enforcement action against the crypto exchange. By not participating in the agreement, the SEC gave itself the opportunity to establish legal precedent on the classification of cryptos as securities.
This is a position consistent with the regulatory posture adopted in recent months by SEC Chairman Gary Gensler. A strategy whose stated objective is to assert its normative domination over the crypto industry.
Thus, for the SEC, it seems more important to ensure regulatory jurisdiction over cryptos than to conclude individual agreements with crypto exchanges. This is why, despite this agreement, the American financial regulator continues to attack them, the most recent being Kraken.
Finally, by avoiding interference in the settlement with Binance, the SEC maintains its aggressive regulatory policy. This, in anticipation of a larger legal victory that could establish legal precedents supporting its ambition to regulate the entire crypto market.
The SEC engaged in a normative turf war with the CFTC
According to analysts, the SEC’s absence from the Binance-DOJ settlement not only serves its long-term regulatory goals. It is also a way for it to win its jurisdictional turf war against the Commodity Future Trading Commission (CFTC).
Indeed, Gary Gensler has always claimed regulatory authority from the SEC over the majority of digital assets. A position that the boss does not intend to change, despite all the legislative initiatives which have targeted him in recent months.
This claim has nothing to do with that of the CFTC which, until now, only considers itself competent regarding certain specific cryptos. This is particularly the case with Ether, the native crypto of the Ethereum platform.
Ultimately, the SEC’s strategic absence from the DOJ’s settlement with Binance positions the agency for a more impactful legal victory. This, by solidifying its authority in the regulation of the crypto industry.
It seems that thanks to this strategy, the financial regulator has skillfully prepared to win its legal battle against Binance. He successfully transformed an initially difficult lawsuit into a more certain enforcement effort for the SEC. Hours of sustained regulatory austerity potentially lie ahead for any the crypto industry.
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