The post SEC vs Kraken: What the Partial SEC Win Means for Crypto Exchange appeared first on Coinpedia Fintech News
Granting a partial victory to the Securities and Exchange Commission in its legal battle against Kraken, a US-based cryptocurrency exchange, a federal judge in California, William Orrick, dismissed some key defenses tabled by the exchange. Would the development influence the destiny of other exchanges, which have presented similar defenses in their legal battles against the regulator?
How SEC Scores Partial Victory Over Kraken?
The primary defense Kraken used against the SEC was the major questions doctrine argument, which says that courts should not interpret laws as giving agencies authority over major issues unless Congress has explicitly stated it.
Judge Orrick rejected the argument, citing that crypto has not reached the level of economic significance of energy markets or student loans.
Kraken’s Fair Notice Defense Remains Active
Meanwhile, Kraken’s argument that the SEC didn’t provide clear guidance on how the Howey Test applies to its transactions was accepted by the judge. It prevented the SEC from winning a clear advantage in its legal battle against the exchange.
SEC Lawsuit Against Kraken
It was in November 2023 that the SEC failed a lawsuit against Kraken. The key allegation in the lawsuit was that the exchange had violated securities laws since 2018. Last year, a US Federal Court declined a motion seeking the dismissal of the SEC lawsuit against the exchange.
Broader Implications of the Kraken Judgement for Crypto Companies
Several other crypto firms, including Coinbase, Ripple and Binance, have used the major questions doctrine argument to defend themselves against the SEC’s legal actions.
The Kraken Judgement sets a precedent for how courts may interpret the SEC’s authority over the crypto industry.
SEC’s Crypto Task Force
Anyway, the new SEC administration is very keen to create a clear regulatory framework for the crypto industry. The SEC recently created a crypto task force, under the leadership of SEC Commissioner Hester Peirce, to create a clear framework for digital assets while balancing enforcement and innovation.
In conclusion, the SEC’s partial victory over Kraken signals a turning point in crypto regulation. While the rejection of Kraken’s major questions defense sets a precedent, the acceptance of its fair notice argument highlights the need for clearer guidelines. As more crypto companies face regulatory scrutiny, the balance between enforcement and innovation remains crucial for the industry’s future.
