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The legal duel between the United States Securities and Exchange Commission (SEC) and Kraken, a leading cryptocurrency exchange, looks like another misguided attempt by the SEC to exert control over an industry that fundamentally challenges an outdated regulatory playbook. The agency’s lawsuit, filed in November, accuses Kraken of operating as an unregistered securities exchange.

The lawsuit isn’t just a repeat of the SEC’s past failures. It’s also a glaring example of regulatory overreach that fails to grasp the essence of cryptocurrency. It mirrors the agency’s actions against Coinbase, which mark a pattern of aggressive regulation that is both ineffectual and counterproductive. In its case against Coinbase, the SEC allegations similarly involved operating as an unregistered securities exchange. The approach fundamentally misunderstands the nature of cryptocurrency exchanges.

The lawsuit isn’t just a repeat of the SEC’s past failures. It’s also a glaring example of regulatory overreach that fails to grasp the essence of cryptocurrency. It mirrors the agency’s actions against Coinbase, which mark a pattern of aggressive regulation that is both ineffectual and counterproductive. In its case against Coinbase, the SEC allegations similarly involved operating as an unregistered securities exchange. The approach fundamentally misunderstands the nature of cryptocurrency exchanges.

Unlike traditional securities exchanges, platforms like Kraken offer a diverse range of digital assets that do not fit neatly into the securities framework. This misclassification by the SEC reveals a lack of understanding of the unique characteristics of cryptocurrencies, which function as decentralized assets, often with utility or currency-like features rather than conventional securities.

Related: Expect some crypto companies to fail in the wake of Bitcoin’s halving

One of the most striking issues is the absence of technological neutrality — the principle that regulatory frameworks should apply equally to all forms of technology, without favoring or penalizing any particular one. By forcing cryptocurrencies into the traditional securities mold, the SEC is not only misapplying laws but also showing a clear bias against digital assets. This lack of neutrality not only hinders innovation but also unfairly targets platforms that are striving to work within the regulatory landscape.

The SEC lawsuit against Kraken shamed the exchange for telling users they could attempt to profit by dollar-cost averaging into Solana. Source: Securities & Exchange Commission

The aggressive stance of the SEC risks driving innovation and business away from the U.S. to more crypto-friendly jurisdictions. This phenomenon, known as regulatory arbitrage, could result in the U.S. losing its position as a leader in technological innovation. The crypto industry is global, and excessive regulation in one country simply pushes businesses to relocate, taking their economic benefits and innovations with them.

Related: 3 theses that will drive Ethereum and Bitcoin in the next bull market

The Kraken lawsuit is set to become another example of the SEC’s failure to successfully regulate the crypto industry, akin to the outcome of its actions against Coinbase. This repetitive cycle of aggressive and misinformed regulation is not only futile but also harmful to the credibility of the SEC. It sends a message that the regulatory body is more interested in flexing its regulatory muscle than in understanding and adapting to new technological paradigms.

The case isn’t just an isolated legal battle. It is indicative of a broader issue within the U.S. regulatory framework’s approach to cryptocurrencies. The SEC must move beyond its current, outdated tactics and engage with the crypto industry in a more informed and constructive manner. Regulation is necessary, but it must be reasonable, well-informed, and designed to foster innovation, not stifle it.

It looks the SEC is set for another resounding defeat, which will serve as one more reminder of the need for a new approach by regulators.

Daniele Servadei is the 20-year-old founder and CEO of Sellix, an Italian e-commerce platform that has processed more than $75 million in transactions for more than 2.3 million customers worldwide. He’s attending the University of Parma for a degree in computer science.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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Another tantrum from the Labour backbenches is inevitable

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Rachel Reeves hints at tax rises in autumn budget after welfare bill U-turn

In common with many parents across the country, here’s a conversation that I have with my young daughter on a semi-regular basis (bear with me, this will take on some political relevance eventually).

Me: “So it’s 15 minutes until your bedtime, you can either have a little bit of TV or do a jigsaw, not both.”

Daughter: “Ummmm, I want to watch TV.”

Me: “That’s fine, but it’s bed after that, you can’t do a jigsaw as well.”

Fast-forward 15 minutes.

Me: “Right, TV off now please, bedtime.”

(Pause)

Daughter: “I want to do a jigsaw.”

Now replace me with the government, the TV and jigsaw options with axing welfare cuts and scrapping the two-child cap, and my daughter with rebellious backbenchers.

Politics latest: Former Labour leader calls for wealth tax on assets above £10m

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Rachel Reeves’s fiscal dilemma

That is the tension currently present between Downing Street and Labour MPs. And my initial ultimatum is the messaging being pumped out from the government this weekend.

In essence: you’ve had your welfare U-turn, so there’s no money left for the two-child cap to go as well.

As an aside – and before my inbox fills with angry emails lambasting me for using such a crude metaphor for policies that fundamentally alter the lives of some of the most vulnerable in society – yes, I hear you, and that’s part of my point.

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Welfare U-turn ‘has come at cost’

For many in Labour, this approach feels like the lives of their constituents are being used in a childish game of horse-trading.

So what can be done?

Well, the government could change the rules.

Altering the fiscal rules is – and will likely remain – an extremely unlikely solution. But as it happens, one of Labour’s proverbial grandparents has just popped round with a different suggestion.

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Welfare: ‘Didn’t get process right’ – PM

A wealth tax, Lord Neil Kinnock says, is the necessary outcome of the economic restrictions the party has placed on itself.

Ever the Labour storyteller, Lord Kinnock believes this would allow the government to craft a more compelling narrative about whose side this administration is on.

That could be valuable, given one of the big gripes from many backbench critics is that they still don’t really understand what this prime minister stands for – and by extension, what all these “difficult decisions” are in aid of.

The downside is whether it will actually raise much money.

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Is Corbyn an existential risk to Labour?

The super-rich may have lots of assets to take a slice from, but they also have expensive lawyers ready to find novel ways to keep their client’s cash away from the prying eyes of the state.

Or, of course, they could just leave – as many are doing already.

In the short term, the future is a bit easier to predict.

If Downing Street is indeed now saying there is no money to scrap the two-child cap (after heavy briefing in the opposite direction just weeks ago), an almighty tantrum from the backbenches is inevitable.

And as every parent knows, the more you give in, the harder it becomes to hold the line.

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UK restores diplomatic ties with Syria

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UK restores diplomatic ties with Syria

The UK has re-established diplomatic ties with Syria, David Lammy has said, as he made the first visit to the country by a British minister for 14 years.

The foreign secretary visited Damascus and met with interim president Ahmed al Sharaa, also the leader of the rebel group Hayat Tahrir al-Sham (HTS), and foreign minister Asaad al Shaibani.

It marks the latest diplomatic move since Bashar al Assad’s regime was toppled by rebel groups led by HTS in December.

In a statement, Mr Lammy said a “stable Syria is in the UK’s interests” and added: “I’ve seen first-hand the remarkable progress Syrians have made in rebuilding their lives and their country.

“After over a decade of conflict, there is renewed hope for the Syrian people.

“The UK is re-establishing diplomatic relations because it is in our interests to support the new government to deliver their commitment to build a stable, more secure and prosperous future for all Syrians.”

Foreign Secretary David Lammy shakes hands with Syrian interim president Ahmed al-Sharaa in Damascus. Pic: X / @DavidLammy
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Foreign Secretary David Lammy with Syria’s interim president Ahmed al Sharaa in Damascus. Pic: X / @DavidLammy

The Foreign, Commonwealth and Development Office has also announced a £94.5m support package for urgent humanitarian aid and to support the country’s long-term recovery, after a number of British sanctions against the country were lifted in April.

While HTS is still classified as a proscribed terror group, Sir Keir Starmer said last year that it could be removed from the list.

The Syrian president’s office also said on Saturday that the president and Mr Lammy discussed co-operation, as well as the latest developments in the Middle East.

Read more:
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Since Assad fled Syria in December, a transitional government headed by Mr al Sharaa was announced in March and a number of western countries have restored ties.

In May, US President Donald Trump said the United States would lift long-standing sanctions on Syria and normalise relations during a speech at the US-Saudi investment conference.

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From May: Trump says US will end sanctions for Syria

He said he wanted to give the country “a chance at peace” and added: “There is a new government that will hopefully succeed.

“I say good luck, Syria. Show us something special.”

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Secret Service seizes $400M in crypto, cold wallet among world’s largest

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Secret Service seizes 0M in crypto, cold wallet among world’s largest

Secret Service seizes 0M in crypto, cold wallet among world’s largest

Secret Service quietly amasses one of the world’s largest crypto cold wallets with $400 million seized, exposing scams through blockchain sleuthing and VPN missteps.

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