JPMorgan emphasized the importance of U.S. lawmakers creating a comprehensive regulatory framework for the crypto industry and defining the roles and responsibilities of the SEC and the CFTC. The recent lawsuits filed by the SEC against Binance and Coinbase underscored this need, as stated by a research report by JPMorgan on Thursday.
According to the report, the SEC’s perspective is that the majority of cryptocurrencies should be categorized as securities. Consequently, the SEC believes that most crypto companies and trading activities should be subject to its oversight and adhere to the regulatory frameworks that are currently in place for traditional securities.
As claimed by analysts led by Nikolaos Panigirtzoglou, the ongoing legal case between the SEC and Ripple is not a straightforward matter, as it remains unclear which cryptocurrencies would be considered securities. This lack of legal clarity is exemplified by the SEC vs Ripple case.
In recent developments, the SEC filed lawsuits against Binance, its founder and CEO Changpeng “CZ” Zhao, as well as the operating company of Binance.US, accusing them of violating federal securities laws. Shortly after, the SEC also sued Coinbase, another leading crypto exchange, on similar charges.
JPMorgan stated that these actions are increasing the pressure on U.S. lawmakers to develop a comprehensive regulatory framework before the end of this year. Until such regulations are in place, it is anticipated that crypto activity will continue to shift away from the United States and towards decentralized entities. Additionally, the bank noted that crypto venture capital funding is likely to remain restrained.
The research report mentioned that if lawmakers uphold the SEC’s position, exchanges like Coinbase and Binance.US, along with other U.S.-based exchanges, would be required to register as brokers. Furthermore, the majority of cryptocurrencies would be treated as securities, according to the report’s findings.