The United States Securities and Exchange Commission (SEC) has withdrawn its request for a court to rule on whether certain tokens, mentioned in its lawsuit against Binance, should be classified as securities.
In a filing submitted on July 30, the SEC responded to the court’s minute order by seeking to amend its complaint related to “Third Party Crypto Asset Securities.” The agency stated that this amendment negates the need for a judicial ruling on the classification of these tokens at this time.
According to the SEC, this amendment eliminates the need for the court to rule on the adequacy of the allegations regarding these tokens at this time. Consequently, the agency is no longer seeking a court decision on whether the tokens in question are considered securities.
In its original lawsuit, the SEC had argued that several tokens, including Binance Coin (BNB), Binance USD (BUSD), Solana (SOL), Cardano (ADA), Polygon (MATIC), Cosmos (ATOM), The Sandbox (SAND), Decentraland (MANA), Axie Infinity (AXS), and Coti (COTI), were securities. The SEC’s broader stance, asserted in June 2023, identified at least 68 tokens as securities, impacting over $100 billion worth of cryptocurrencies in the market.
The recent filing suggests a shift in the SEC’s approach, as it no longer seeks immediate judicial determination on these tokens’ status.
The SEC’s retraction of its request for a ruling follows a challenge from Iowa’s Attorney General, Brenna Bird. On July 22, 2024, Bird, supported by attorneys general from Arkansas, Indiana, Kansas, Montana, Nebraska, and Oklahoma, filed an amicus brief asserting that the SEC is overstepping its regulatory authority in the cryptocurrency sector. The brief argues that the SEC’s enforcement actions are stifling innovation and could undermine state laws designed to protect consumers. It raises constitutional concerns under the Major Questions Doctrine and federalism, contending that regulation of the cryptocurrency industry requires explicit congressional authorization, which they argue the SEC lacks. Additionally, the brief claims that the SEC’s approach violates the Administrative Procedure Act (APA) by regulating through enforcement rather than a proper legislative framework.
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