JPMorgan strategists suggest that United States-based crypto exchanges, including Coinbase and Binance.US, which recently faced lawsuits from the Securities and Exchange Commission (SEC), may encounter regulatory pressure to register with the agency.
In a note, JPMorgan strategists led by Nikolaos Panigirtzoglou stated that the SEC’s position could potentially be confirmed by lawmakers, resulting in the requirement for exchanges like Coinbase and Binance.US to register as brokers.
Additionally, they mentioned that most cryptocurrencies could be treated as securities under such circumstances. While this regulatory shift may bring increased burdens and costs to the crypto industry, it could also provide certain benefits, including enhanced transparency and investor protection through similar regulations applied to traditional markets like equities.
JPMorgan highlights SEC’s recent lawsuit
The Securities and Exchange Commission (SEC) recently filed lawsuits against Binance, Binance.US, and Coinbase, alleging violations of U.S. securities laws. The SEC aims to seek court orders that would require these firms to comply with regulations applicable to stock exchanges or cease trading crypto assets within the United States.
JPMorgan strategists have highlighted the importance of U.S. lawmakers developing a clear regulatory framework this year in response to the SEC’s actions. They believe that without such clarity, crypto activity in the U.S. may relocate to decentralized entities outside the country, and venture capital funding for the crypto industry will remain limited.
According to the strategists’ note, implementing regulations could have positive outcomes by purging the industry of bad practices and bad actors. This, in turn, would foster the maturation of the industry and potentially attract more institutional participation.