Binance.US, the U.S. arm of the world’s largest cryptocurrency exchange Binance, announced on Monday that it will delist the AMP token after the US Securities and Exchange Commission (SEC) described the token as a security.
Last week on July 21, the SEC identified nine crypto assets as securities, and the AMP token was one of them.
In a statement made on Monday, Binance.US said that the exchange always supports transparency while adhering to compliance with the directives of federal authorities.
The exchange stated that projects trading under its platform should continue to meet the listing standards based on the legally approved scope of the Digital Asset Risk Assessment Framework.
Binance.US said it will delist the AMP token “out of an abundance of caution” of potential enforcement by federal regulators.
The exchange disclosed it will close down deposits of Amp (AMP) and remove the AMP/USD trading pair from its platform on Aug 15. The exchange said the move follows the token’s mention in legal action from the SEC.
According to its blog post, Binance.US stated: “We believe that, in some circumstances, delisting an asset best protects our community from undue risk. We operate in a rapidly evolving industry, and our listing and delisting processes are designed to be responsive to market and regulatory developments.”
Binance.US said AMP is the only token of the nine mentioned in the SEC’s legal case trading on its platform. The exchange added that it may resume trading of AMP in the future on its platform, according to the regulator’s decision.
Implications of SEC Calling Coins Securities
On 21st July, The SEC brought insider trading charges against a former Coinbase (COIN) product manager and other two individuals. The regulator also mentioned nine cryptocurrencies as securities, with potential plans to charge the issuers and the exchange listing the so-called securities.
The designation of the nine cryptocurrencies as securities could have wide implications in the crypto markets. The designation means that the coins will be regulated as if they were a stock or a bond. The issuers of such tokens will also have to comply with the country’s securities laws to be able to offer the assets to investors within the US.
Such designations would make running a crypto exchange more expensive and complex. Furthermore, exchanges would face continuous scrutiny by regulators, which could lead to penalties, fines, penalties and, in the worst case, prosecutions if criminal authorities got involved. This could also mean losing future funding from investors who may abandon trading because of fear of increased compliance burdens and regulatory scrutiny.
And more implications are yet to come as SEC’s rulings are underlay.
In its simplest form, whether an asset is or is not a security under US rules is basically a question of how much such a token looks like shares issued by a firm raising money.
To determine that, the SEC applies a legal test from a 1946 US Supreme Court decision. Under that framework, the SEC can consider an asset as security if investors raise or pump in funds with plans to profit from the efforts of the company’s leadership.
In December 2020, the SEC filed a lawsuit against Ripple Labs Inc., for allegedly raising funds by selling the XRP digital token without registering it as a security.
The regulator claimed that the firm was funding its growth by issuing XRP to investors, betting its value would rise. The case is now a massive legal battle between the SEC and Ripple.
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