SEC’s Impact on the Crypto Market and the Future of Regulation

After the market crash in 2022, the crypto market has been recovering, but the SEC has cast a shadow over the industry. We have witnessed numerous events, including the Binance and Coinbase lawsuits and the classification of many altcoins as securities. Although the courts have occasionally ruled against the SEC, the regulatory agency has not abandoned its relaxed application of the Howey test.

SEC and the 2023 Report

The US securities regulator, the SEC, has addressed various issues this year, with a particular focus on events in the crypto industry. The number of lawsuits filed this year has increased by 3% compared to previous years, reaching 784. The SEC has filed lawsuits against Coinbase, Sam Bankman-Fried, and even celebrities like Kim Kardashian, highlighting the threats it sees in the crypto sector.

Gary Gensler, who took office at the end of 2020 and has repeatedly stated that cryptocurrencies are securities, said:

“Our people are investing, and they benefit from the work of our enforcement division, who act as police officers in the investment field. The results of the past fiscal year demonstrate how strong our fight against wrongdoers is.”

Cryptocurrencies and the SEC

According to the report, the SEC’s enforcement division has filed a wide range of lawsuits, from crypto scams to unregistered crypto offerings and illegal promotions by celebrities. While the CFTC has had its most active year in the crypto sector, filing only 49 cases, it is known that the SEC has filed close to 150 cases.

Gensler has consistently emphasized that crypto firms need to register with the agency and has stated that most cryptocurrencies are indeed securities. Last week at DC Fintech Week, Gensler warned that there are still “numerous notorious scammers” in the industry.

The SEC is expected to have an active period in the crypto sector next year as well. The agency has already filed its first cases in the DeFi and NFT space and indicated that more will follow. With the conclusion of the XRP Coin appeals, the SEC aims to establish a legal basis for the flexible application of the Howey test and initiate similar lawsuits against all altcoins.

For now, the courts are not fully granting the SEC’s desired outcomes. Although the agency wanted to classify XRP Coin sales on crypto exchanges as securities, a judge ruled against it.

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