SEC Faces Loss in Recycled Case Against Kraken
Kraken is battling charges levelled by the SEC for selling cryptocurrencies. However, it appears to be a recycled version of a losing case.
The legal battle between Kraken, a major cryptocurrency exchange, and the U.S Securities and Exchange Commission (SEC) appears to be another ill-advised effort by the regulator to exercise control over a sector that objects to an obsolete regulatory playbook.
SEC Allege Unregistered Securities Exchange
According to the November-filed lawsuit, Kraken is accused of running as an unregistered securities exchange.
This case is a repeat of the Securities and Exchange Commission’s earlier failures and a conspicuous example of regulatory overreach that does not grasp the main idea of cryptocurrency. It reflects the regulator’s actions against Coinbase, which indicates a trend of hostile regulation that is both ineffective and weak.
In its lawsuit against Coinbase, the Securities and Exchange Commission assertions similarly entailed running as an unregistered securities exchange. This strategy essentially misconstrues the nature of cryptocurrency exchanges.
Platforms such as Kraken differ from traditional securities exchanges since they provide a vast range of digital assets that fail to fit closely into the securities structure. The Securities and Exchange Commission’s confusion indicates a lack of understanding of cryptocurrencies’ special attributes. Cryptocurrencies act as decentralized assets, mostly with currency-resembling or utility attributes, instead of traditional securities.
The absence of technological neutrality is one of the most noticeable problems. Technological neutrality is the concept that regulatory structures are applied similarly to all kinds of technology without punishing or supporting any.
SEC Compelling Cryptocurrencies into Conventional Securities Classification
The SEC’s idea of forcing cryptocurrencies into the conventional securities mold means the regulator is abusing regulations and displaying a vivid prejudice against digital assets. Further, the absence of neutrality deters innovation and unreasonably targets platforms that endeavour to follow the set regulations.
The Securities and Exchange Commission’s aggressive position might drive businesses out of the United States to more crypto-friendly nations. This phenomenon is referred to as regulatory arbitrage and might lead to the United States losing its position as a leader in technological innovation. The crypto sector is international, and extreme regulation in a nation results in business relocation. In turn, the businesses move their innovations and economic benefits.
Kraken to Vigorously Defend Against SEC’s Suppressing Action
The Kraken case will be another example of the Securities and Exchange Commission’s failure to control the crypto sector effectively, similar to the results of its deeds against Coinbase. The tedious sequence of misguided and hostile regulation is pointless and damaging to the SEC’s integrity. In this case, it indicates the regulatory body’s interest in flexing its regulatory force instead of comprehending and adjusting to new technological models.
This case is not entirely an isolated legal war. It indicates a broader problem within the United States regulatory framework’s cryptocurrency strategy. The Securities and Exchange Commission should move past its present and obsolete approaches and engage with the crypto sector constructively and more informedly.
Despite regulation being vital, it should be well-informed, sensible, and designed to promote innovation instead of suppressing it.
It seems the Securities and Exchange Commission is facing another massive defeat, which will be an extra reminder of the importance of a new strategy by regulators.
