📌 What is the SEC?
SEC (U.S. Securities and Exchange Commission) is the federal regulator in the USA, established in 1934 after the Great Depression. Its mission is to protect investors, ensure fair and efficient markets, and foster trust in the financial system.
Key SEC Powers:
registration and oversight of exchanges, brokers, investment companies;
investigating financial fraud;
ensuring disclosure by issuers;
lawsuits against violators of federal securities laws.
🧭 SEC Structure
The SEC consists of five commissioners appointed by the President of the USA, and the department's work is divided into key divisions:
Division of Enforcement - investigations and lawsuits;
Division of Corporation Finance - oversight of issuers;
Division of Investment Management - oversight of funds and investment advisers;
Division of Trading and Markets - oversight of trading platforms.
📚 How SEC classifies tokens.
The SEC's main legal tool is the Howey Test, formulated by the Supreme Court in 1946, which states that an asset is considered a security if there is an investment of money in a common enterprise with the expectation of profits to be derived from the efforts of others. Most tokens in ICO projects, according to the SEC, fit this definition, meaning they fall under securities laws, necessitating registration, disclosure, and compliance with certain requirements.
⚖️ SEC and the Crypto Market: Key Cases.
Since 2017, the SEC has significantly intensified oversight of cryptocurrencies.
Here are the most important cases.
1. Ripple Labs (XRP)
The SEC filed a lawsuit in 2020, accusing Ripple of selling unregistered securities worth over $1.3 billion. Ripple argued that XRP is not a security but a currency. In 2023, the court partially sided with Ripple, stating that sales of XRP on the secondary market are not considered the sale of securities, but institutional sales did violate the law.
2. Coinbase.
In 2023, the SEC filed a lawsuit against the largest American exchange, accusing it of trading tokens that the commission considers securities (this included assets such as Solana, Cardano, Polygon). Coinbase, in turn, filed a countersuit demanding clarity in regulation and claiming that the tokens do not fall under the commission's jurisdiction.
3. Binance.
The SEC accused Binance of operating an unregistered platform and providing services to Americans without a license. The lawsuit also included allegations of manipulating customer funds. Binance agreed to a multibillion-dollar settlement with the DOJ, and CZ (the head of Binance) stepped down.
🏛️ SEC's Investigative Methods.
The SEC has broad powers, such as:
1. Engaging experts and technical analysts, including blockchain tracking;
2. Obtaining information on agendas from exchanges and banks;
3. Lawsuits in federal courts;
4. Pre-litigation settlements, including fines and business bans.
5. The SEC also actively collaborates with FinCEN, IRS, and DOJ (Department of Justice), particularly in cases involving money laundering and sanctions.
⚙️ SEC's Cryptocurrency Regulation Issues.
1. Lack of clear legislation (the USA has yet to pass a separate law on digital assets, the SEC operates under the old acts of 1933 and 1934).
2. Jurisdictional conflicts. There is often an overlap of powers between the SEC and the CFTC (futures regulator), especially concerning assets like Ethereum.
3. Criticism for "regulation by enforcement." The crypto community accuses the SEC of not providing clear rules and instead filing lawsuits retrospectively.
📉 Market Implications.
Crypto companies are increasingly moving from the USA to Asia, the Emirates, Latin America, as innovations are stifled because startups fear falling under regulatory scrutiny. Additionally, shadow markets are emerging (telegram bots, decentralized P2P solutions, outside of the SEC's reach).
✅ Conclusion.
The SEC plays a central role in defining the future of the crypto industry in the USA. Its actions can be seen as attempts to protect investors, but without a modern legal framework and transparent rules, these attempts are increasingly viewed as repressive.
For crypto companies, this is a signal: either adapt to harsh conditions, move to more friendly jurisdictions, or build completely decentralized and uncontrolled solutions.
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