Prominent cryptocurrency exchange Crypto.com filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) in response to regulatory actions that it believes to be unjust and overreaching. The SEC sent the cryptocurrency exchange a Wells notice, indicating that an enforcement action may be forthcoming. According to Crypto.com, the SEC is going beyond its legal jurisdiction by trying to regulate almost all crypto assets as securities while arbitrarily excluding Bitcoin and Ethereum.
According to Kris Marszalek, co-founder and CEO of Crypto.com, a lawsuit of this kind would contribute to ensuring the industry’s survival in the US. He added that the exchange, along with other industry players, has been forced to oppose the SEC’s efforts as a result of the agency’s actions. Marszalek emphasized that the SEC’s recent moves run counter to bipartisan efforts, suggesting that the upcoming administration may take a far more progressive attitude on cryptocurrency regulation.
Crypto.com Derivatives North America Extends Petition to CFTC
Meanwhile, Crypto.com’s U.S. subsidiary, Crypto.com Derivatives North America (CDNA), has filed a petition against both the SEC and the Commodity Futures Trading Commission (CFTC) to determine which agency has jurisdiction over specific cryptocurrency derivative products.
The petition, filed under the Dodd-Frank Act, seeks legal categorization of certain products as “swap,” “security-based swap,” or “mixed swap.” The agencies have 120 days to respond, or the public may justify their decisions.
Nonetheless, Crypto.com emphasized that it abides by the law by mentioning that it is a U.S.-registered money services company with FinCEN. The company emphasized that it focuses on safety, security, and regulatory compliance in its operations and that it holds more than 40 state money transmitter licenses.
Final Thoughts
Crypto.com’s lawsuit against the U.S. SEC highlights the growing tensions between the cryptocurrency industry and regulators. The exchange argues that the SEC is overstepping its legal authority by broadly classifying most crypto assets as securities while inconsistently excluding Bitcoin and Ethereum.
By taking legal action, Crypto.com seeks to defend the industry from what it views as unjust regulation, which could hinder innovation and growth in the U.S. market.
CEO Kris Marszalek’s remarks point to the possibility of more favorable regulatory approaches in the future, but the current dispute underscores the complex and unresolved nature of crypto regulation. This legal battle could set a precedent for how digital assets are classified and regulated, influencing the future of the crypto landscape.
