In a joint court filing with Binance, the SEC has sought leave to amend its complaint against the crypto exchange, removing the need for the court to rule on whether several leading crypto projects should be labelled securities.Reports Say SEC May Intend to Back Down on Claiming SOL, ADA, MATIC are Securities
The response to the filing on X / Twitter has been mostly negative, with many highlighting the SEC’s inconsistency in applying its own regulations and failure to provide any regulatory clarity.
Is that the distant sound of flip-flopping I hear?
A court filing jointly submitted yesterday by the US Securities and Exchange Commission (SEC) and Binance, as part of their ongoing legal tussle, suggests the regulator might be performing an almighty flip-flop in its battle to label many leading crypto projects unregistered securities.
In the filing the regulator sought to amend its complaint against Binance in regards to what it calls “Third Party Crypto Asset Securities.” Although the SEC didn’t say precisely how it intends to amend its complaint, the filing means that the court will no longer be required to rule on whether a number of cryptocurrencies sold by Binance—including Solana (SOL), Cardano (ADA) and Polygon (MATIC)—are securities.
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This backdown seems to be part of a larger political shift in US politics towards a more crypto-friendly position as both sides realise a large number of voters will decide who to vote for based, at least partly, on the candidates’ digital assets policies.
Details of SEC’s Filing and Implications
The joint filing came in response to the court’s earlier minute order issued on July 9 in which the judge clarified some of her earlier comments, which Binance lawyers had misinterpreted to mean the securities status of the cryptocurrencies had already been removed from the case.
In this latest filing the SEC clearly laid out its purpose, explaining that it:
In non-legal mumbo-jumbo this essentially means the SEC intends to amend its complaint against Binance so that the court will no longer need to rule on the security status of a bunch of cryptocurrencies (the top ten of these tokens by market cap are SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS and COTI). That isn’t to say the SEC will never ask a judge to decide the security status of these or other tokens in future cases.
Many prominent figures in the crypto industry responded to the filing. Unsurprisingly most responses were negative, pointing out what they see as the SEC’s inconsistency and hypocrisy.
Ripple’s Chief Legal Officer, Stuart Alderoty, posted:
While the CryptoLaw account, which was founded by well known crypto lawyer John Deaton, referred to the findings in the SEC’s case against Ripple before calling on Gary Gensler to be replaced as head of the SEC:
Both Sides of US Politics Clamouring for the Crypto Vote
The SEC’s request to amend its complaint seems like something of a backdown from the regulator in its crusade to label virtually all cryptocurrencies as securities (apart from Bitcoin and, for reasons most people can’t quite understand, Ethereum). Given the political climate around crypto at the moment, there’s reason to believe this backdown may be politically motivated. Reports Say SEC May Intend to Back Down on Claiming SOL, ADA, MATIC are Securities
In the lead up to this year’s presidential election both sides of US politics are vying to attract the crypto vote, with Trump so far courting crypto voters more aggressively, saying things like he’ll be the “crypto president” and last week at Bitcoin 2024 declaring he wants to make the US the “crypto capital of the planet.”
The Democrats have recently started to warm up to crypto too, perhaps spooked by Trump’s aggressive campaigning. Since replacing Biden as nominee, Kamala Harris has reportedly reached out to Mark Cuban to discuss crypto policy, and also announced plans for the Democrats to ‘reset’ its relationship with crypto. It’s also been suggested the Biden administration put pressure on the SEC to approve the Ethereum ETF.
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