The US Chamber of Digital Commerce, a crypto advocacy group, is backing Binance in its fight against the U.S. Securities and Exchange Commission, which charged the crypto exchange’s American affiliate with various securities violations earlier this year.
In an amicus brief filed Thursday, the group said the SEC is stifling financial innovation and driving crypto startups offshore by creating a hostile regulatory environment within the United States. What's more, the group says the SEC has got its analysis of crypto assets totally wrong.
In filing a lawsuit against Binance, “the SEC is suing the equivalent of a grocery store selling oranges and other fruit, or an online e-commerce marketplace, like Amazon,” the group wrote. “Tokens alone are not securities, and the markets where they are available to buy and sell are not securities exchanges.”
Since Gary Gensler assumed his position as chair of the SEC, the Commission has levied dozens of enforcement actions against digital asset companies. This year, some of those names included the largest cryptocurrency exchanges in the world, such as Binance, Coinbase, and Kraken.
Alleged violations include offering unregistered staking-as-a-service products, and listing coins on their platforms that violate securities laws. Coinbase and others have countered with claims that there aren’t yet clear guidelines on which cryptocurrencies qualify as securities.
According to the lobbyist group, the SEC’s arguments fail to recognize the distinction between “the subject of an investment-contract security,” and “the investment contract itself,” causing them to falsely label many crypto tokens as unregistered securities.
“The SEC has adopted a regulation-by-enforcement approach, arbitrarily categorizing various blockchain-based digital assets as securities and penalizing businesses for failing to obtain SEC registrations that are not actually available to them,” the Chamber wrote in its brief.
Some alleged security tokens listed by Binance included its native token BNB, the stablecoin BUSD, and other popular crypto assets such as Solana (SOL), Cardano (ADA), and Polygon (MATIC), according to the SEC’s lawsuit in June.
A federal court partially ruled against the SEC when it tried to claim that certain sales XRP by the asset’s issuer, Ripple, qualified as unregistered securities offerings. The SEC on Thursday dropped its charges against Ripple executives but is still pursuing an appeal with regard to charges against the company itself.