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Binance-DOJ Agreement: SEC in Retreat, Why?

Wed 29 Nov 2023 ▪ 4 min of reading ▪ by Luc Jose A.
Getting informed Regulation

Recently, the crypto platform Binance and the U.S. Department of Justice (DOJ) have reached a settlement, leading to the abandonment of investigations against the company. Interestingly, the Securities and Exchange Commission (SEC) did not join the agreement. According to some analysts, this stance is anything but innocent.

SEC and Binance crypto exchange logos

Absence of the SEC in the Binance-DOJ Agreement

The absence of the SEC from the recent $4.3 billion settlement with Binance appears to be a strategic decision. At least, that’s the perspective of some analysts who believe that the financial regulator’s position is part of a very specific logic.

They argue that it is a policy that allows the regulatory body to maintain a strong coercive action against the crypto exchange Binance at a later time. By not participating in the agreement, the SEC has given itself the opportunity to establish a legal precedent on the classification of cryptocurrencies as securities.

This is a consistent position with respect to the regulatory stance taken in recent months by the SEC Chairman, Gary Gensler. A strategy aimed at asserting normative domination over the crypto industry.

Thus, for the SEC, it seems more important to ensure regulatory jurisdiction over cryptocurrencies than to conclude individual deals with crypto exchanges like Binance. This is why, despite this agreement, the U.S. financial regulator continues to attack them, with the most recent being against Kraken.

Ultimately, by avoiding entanglement in the settlement with Binance, the SEC maintains its aggressive regulatory policy. This is done in anticipation of a more significant judicial victory that could establish legal precedents supporting its ambition to regulate the entire crypto market.

The strategic absence of the SEC from the Binance-DOJ agreement

The SEC Engaged in a Normative Territorial War with the CFTC

According to analysts, the SEC’s absence from the Binance-DOJ settlement conflict serves not only its long-term regulatory goals. It is also a means for it to win its jurisdictional territory war against the Commodity Future Trading Commission (CFTC).

In fact, Gary Gensler has consistently claimed the SEC’s regulatory authority over most digital assets. A position he does not intend to change, despite all the legislative initiatives targeting him in recent months.

This claim is distinctly different from that of the CFTC, which to date, only deems itself competent with respect to certain specific cryptocurrencies. This includes Ether, the native crypto of the Ethereum platform, for example.

Ultimately, the strategic absence of the SEC in the DOJ’s settlement with Binance positions the agency for a more impactful judicial victory. This is done by solidifying its authority in the regulation of the crypto industry.

It seems that with this strategy, the financial regulator has cleverly prepared to win its legal battle against Binance. It has managed to turn an initially difficult lawsuit into a more definite enforcement effort for the SEC. A potential period of sustained regulatory austerity looms for the entire crypto industry.

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Luc Jose A. avatar
Luc Jose A.

Diplômé de Sciences Po Toulouse et titulaire d'une certification consultant blockchain délivrée par Alyra, j'ai rejoint l'aventure Cointribune en 2019. Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l'économie, j'ai pris l'engagement de sensibiliser et d'informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu'elle offre. Je m'efforce chaque jour de fournir une analyse objective de l'actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.