Crypto.com Cleans Up: SEC Investigation Dropped Due to Changing Markets
Crypto.com seems to have come out triumphant in a long battle with U.S. regulators. Their CEO, Kris Marszalek, divulged that the SEC has closed their investigation with them, which is a notable development considering the company received a Wells notice seven months prior. This news comes as there is emerging optimism with regard to regulatory shifts on crypto because the SEC appears to be easing its grip.
A Victory Lap: Crypto.com’s CEO Claims Crypto has Persisted and Become Stronger
After this announcement, Marszalek took to X and expressed his anger and relief, saying, “They employed every single stifling tactic within their means — banning access to banking, auditors, investors, etc. This was an attempt to kill the industry. Not only did we survive, but we came out stronger — all thanks to the vision and the community. Onwards!” There is a sense of narrative regarding the harsh hand of scrutiny and pressure that Crypto.com had to deal with, especially in terms of the relentless crude world of cryptocurrency regulation.
Dropping the Hammer: SEC’s Previous Position
“Mark Marszalek” shared “his thoughts as Crypto.com’s chief legal officer” Lundgren spoke, during a statement made on March 27, 2023, “We, in particular, appreciate the fact that the current SEC leadership made a decision to close the investigation into Crypto.com.” Lundgren further claimed that the previous SEC head’s decision showcased brazen misuse of power that sought to functionally destroy crypto, which added credence to his shifting narrative.
The Legal Clash: The Standoff Continues With Crypto.com
As indicated in the Wells notice sent in August, the intent to legally pursue action against Crypto.com by the SEC initiated strong counteraction from the exchange. This came in the form of a lawsuit in October, where Lundgren accused the Gensler-led commission of not only jurisdictional overreach but also losing sight of reason and direction in their increasingly hostile measures toward crypto. There is no industry that has spent more resources and effort in resolving conflicts than the crypto space.
A Shift Occurs: Recent Relinquishing of Aggression by the SEC
Following the announcement of closing the investigation, the SEC relaxed their approach. This comes alongside a series of relinquished probes and lawsuits Chiefs Consul have endured over the last five weeks. Both sides of the crypto industry, including the ‘flagship’ figureheads of crypto like Coinbase, Unisewap, OpenSea, Immutable, and Consensys, alongside Robinhood and Gemini, have all experienced some level of restriction.
At the very least, the SEC seemed to be following Cumberland DRW’s precedential case with greater interest and even closed their civil enforcement case against Cumberland DRW with prejudice on March 27th.
With New Management Comes Pro-Crypto Policies
The pro-crypto stance softened approach seems to come from the new leadership because the commission underwent some internal changes. Mark Uyeda became acting chair on January 20 after Gensler’s departure, so it looks like changes are being made. Also, there were reports regarding the crypto task force established by the Peirce commission and further indicated a broader and friendlier attitude. In line with those observations, a day before the announcement about the task force, the SEC had stated that they are quitting on some controversial policies, not enforcing a so-called “bankruptcy rule,” which would have obligated financial institutions to classify crypto holdings as liabilities.
Trump: Influencing US Politics and Economics Simultaneously
The change in regulation seems to be a reaction to the US political variables. Former President Trump had his pick of SEC chair Paul Atkins, which could change the balance of power in the SEC and is reportedly close to confirmation. In the meantime, there’s some news for crypto fans, as Trump Media stated they are teaming up with Crypto.com to create “Made in America” ETFs later this year.
Crypto.com will now offer the necessary infrastructure and custody services for the cryptocurrency tokens embedded in these ETFs, which may contain a mix of prominent cryptocurrencies such as Bitcoin (BTC), Ether (ETH), Solana (SOL), XRP, and Cronos (CRO).
A New Dawn for Crypto Regulation?
The combination of closing the investigation without initiating enforcement actions and the subsequent dropping of several other cases creates another policy shift, which might signal a change in stance on cryptocurrency regulation spurred by growing market interest. Though it is too early to discuss the consequence of this decision, it has the potential to shift the environment to be more favorable for the market. The balance of political forces, regulatory control, and market factors will continue determining the framework of crypto regulation in the United States.
