U.S. lawmakers must develop “a comprehensive framework on how to regulate the crypto industries and the relative responsibilities of SEC vs. the Commodity Futures Trading Commission (CFTC),” JPMorgan (JPM) stated in a research report released on Thursday. This is because the Securities and Exchange Commission (SEC) has filed lawsuits against Binance and Coinbase.According to the SEC, the majority of cryptocurrencies should be classified as securities, which means that most crypto firms and trading should be subject to its oversight and adhere to the same legal frameworks as traditional securities, according to the article.
According to analysts lead by Nikolaos Panigirtzoglou, this is not a “straightforward legal case,” and it is unclear whether cryptocurrencies would be categorized as securities.This ambiguity in the law is evident in the SEC v. Ripple case.On grounds of alleged violations of federal securities laws, the regulator announced last week that it was suing Binance, Binance founder and CEO Changpeng “CZ” Zhao, and the operating business for Binance.US.A day later, it brought a similar lawsuit against Coinbase (COIN), a competing exchange.The actions are “increasing the urgency for US lawmakers to develop a thorough regulatory framework by this year,” according to JPMorgan. Cryptocurrency activity will probably keep migrating to decentralized entities and locations outside the United States until this happens.The bank predicted that funding for cryptocurrency venture capital will likely stay low.The majority of cryptocurrencies would be considered as securities and Coinbase, Binance.US, and other U.S. exchanges would be required to register as brokers if lawmakers agree with the SEC’s position, according to the letter.While this might be more “onerous and costly” for the business, it would have some benefits because crypto markets would be properly regulated and provide more transparency and investor protection, the letter stated.
The SEC’s actions from last week have raised questions about several other layer 1 tokens that are claimed to be securities, favoring bitcoin (BTC) and ether (ETH), the bank claimed.