The U.S. cryptocurrency market faced significant disruption due to ongoing legal actions by the Securities and Exchange Commission [SEC]. Regulatory scrutiny against top exchanges like Binance and Coinbase, has caused market concerns. However, JPMorgan saw a silver lining, suggesting that these actions could ultimately benefit the crypto market.
According to a recent research report by JPMorgan, the crypto industry has the potential to see better regulatory measures. The banking giant emphasized that the lawsuits faced by crypto exchanges will push U.S. lawmakers to develop a comprehensive framework for regulating the crypto industry, including the delineation of responsibilities between the SEC and the Commodity Futures Trading Commission [CFTC].
Here’s how the crypto industry should deal with the ‘securities’ label
The SEC has taken a firm stance in viewing numerous assets as securities, showing a strong determination in this regard. The report indicated that the SEC holds the belief that a significant portion of crypto assets should be considered securities. Consequently, the SEC insists that many crypto companies and trading operations should be subject to its supervision. It must comply with the regulatory frameworks that are presently used for traditional securities.
JPMorgan has said that the ongoing legal cases of Coinbase and Binance are not clear-cut in nature. The bank remains unsure about the status of certain crypto assets. This means that the regulatory landscape surrounding them continues to be unclear. The report further read,
“[These lawsuits are] creating more urgency for U.S. lawmakers to come up with a comprehensive regulatory framework by this year.”
The bank stated that unless a comprehensive framework is set, it is expected that crypto activity will continue to shift away from the U.S. It is likely to be directed towards decentralized entities. Additionally, the report suggested that crypto venture capital funding is likely to remain limited. They could also be secured in the absence of clear regulations.
Despite the current negative impact on the industry and the financial strain on the exchanges involved, these suits are expected to have a positive effect on the crypto industry in the future. However, in the meantime, digital assets may suffer.