The future of cryptocurrency depends on the outcomes of the U.S. Securities and Exchange Commission’s (SEC) lawsuits against Binance and Coinbase. This view was expressed in an interview CNBC by former chairman of the CFTC, Timothy Massad.
In early June the SEC filed suit against Binance and its CEO Changpeng Zhao.
Subsequently, the regulator filed suit against Coinbase. The SEC’s claims relate to the company combining broker, exchange and clearinghouse functions, its staking program, and other securities-law violations.
Massad said that one of the crypto market’s main problems is wash trading (wash trading). He estimated such manipulations to account for 50-90% of trading volumes on crypto platforms.
Massad noted that such exchanges engage in proprietary trading, which should not occur. There are also no procedures to prevent the illicit practice.
“The business model of these exchanges is incompatible with how our securities markets operate,” he stressed.
The former CFTC chief believes that authorities and the SEC should establish industry-wide rules to protect investors and prevent fraud and manipulation. He also said there is a need to answer the overarching question of whether cryptocurrencies are securities, he added.
“The question is how we build a regulatory framework that accommodates innovations that could lead to genuinely valuable things, while also protecting investors,” Massad said.
In March, the CFTC filed suit against Binance. The current head of the agency— Rostin Behnam — believes that the Commission needs additional powers to regulate the crypto industry.