The SEC is not only an important financial watchdog but also plays an important Vai in creating transparency, fairness and trust in the global financial market, especially the cryptocurrency market . With its decisive Vai and innovative standards, the SEC ensures not only the safety of investors but is also responsible for shaping the health of the cryptocurrency market.
So what is the SEC? Let's explore with Coin68 the power and influence of the SEC in the financial market, especially in the crypto market through the article below!
What is SEC? The influence of the US Securities and Exchange Commission in the crypto market
What is SEC?
SEC is the abbreviation for Securities and Exchange Commission, in Vietnamese is the United States Securities and Exchange Commission, is an independent federal agency, established under the Securities and Exchange Act of 1934, by a commission The committee consists of five leading members. Commissioners are appointed by the President and confirmed by Congress. The President appoints one of the commissioners as Chairman.
What is SEC?
The primary mission of the SEC is to commit to protecting investors, maintaining fairness, organization and efficiency of the market, and creating favorable conditions for Capital to operate in the right place.
The SEC aims to promote public confidence, providing a diverse range of financial opportunities to individual investors, institutions, entrepreneurs, listed companies and other market participants. .
History of the birth of the SEC
The origins of the SEC date back to the economic crisis of the early 1910s. During this period, private businesses often applied fraud, deception, and false information to attract investors and investors. increase the value of your shares. Lack of transparency in financial reporting and information about the feasibility and sustainability of businesses creates a challenge for investors.
The most famous event in this crisis was Black Monday, which took place on October 28, 1929, when the US stock market began to collapse, causing the largest economic crisis in American history. In a matter of hours, investors lost billions of dollars and millions of Americans lost their jobs.
Black Monday
To overcome the problems discovered from the Black Monday event, the US government began building a legal system to monitor and manage securities activities. Established under the Federal Securities Act of 1933 and the Federal Securities Act as amended in 1934, the SEC officially came into existence in 1934.
The US government's goal in establishing the SEC is to increase transparency and fairness in the stock market, prevent fraud and fraud to increase investor confidence in the market. New SEC regulations require businesses to provide clearer financial reports, register new securities before going to market, and comply with disclosure and distribution regulations.
In addition, the SEC also plays an important Vai in supervising the stock market and securities-related activities, supporting the rule of law in maintaining market transparency and safety.
The SEC's Vai in financial markets
Investor protection
The SEC ensures that companies listed on the stock market provide accurate and complete information that does not contain information that misleads investors. This is to ensure that investors have adequate information to assess the risk and return potential of their investments and are able to make informed decisions.
Supervise and manage financial markets
The SEC supervises the operations of exchanges, brokerage companies, investment funds, and investment consultants, ensuring compliance with relevant laws and regulations. The SEC monitors transactions, prevents fraud and market manipulation, and promotes transparency and fairness in the securities trading process.
Manage rules and regulations
The SEC proposes, establishes, and enforces new rules, regulations, and standards to improve the securities trading process. This includes rulemaking on financial reporting, valuation methods, disclosures and securities regulatory compliance requirements.
Legal implementation and punishment
The SEC has the authority to take legal action and punish violations of securities laws. This includes investigating fraud, market manipulation and fraud, with measures such as imposing fines, banning market participation or taking legal action.
Propose and establish regulations
The SEC is responsible for proposing and establishing new regulations and rules relating to securities trading activities, including proposing regulations on financial reporting, risk management and other requirements for with listed companies.
Supervise companies listed on the exchange
The SEC monitors the activities of companies listed on the stock market, ensuring that they comply with rules and regulations and disclose necessary and reliable information to shareholders and investors.
Valuation of financial instruments
The SEC participates in the process of pricing financial instruments such as securities and investment funds, ensuring transparency, fairness, and preventing fraud and market manipulation.
Support education and investment
SEC provides information and educational materials to increase awareness and understanding of the benefits and risks related to investing, thereby helping investors make smart and confident decisions.
International cooperation
SEC participates in international cooperation activities, building and maintaining relationships with international financial and securities agencies. This includes promoting information Chia , coordinating supervision, and promoting common standards and rules in the global financial sector.
Powers of the SEC
The SEC has the ability to implement a series of measures to ensure transparency and regulatory compliance on the part of companies operating in the financial and securities sectors. Specifically, the SEC can conduct inspections of businesses' accounts to verify the validity and clarity of the financial information they provide.
Additionally, the SEC has the power to require companies to provide detailed information about their financial and securities activities. This is intended to ensure transparency and at the same time help ensure that companies strictly comply with the regulations.
In case of violation, the SEC does not hesitate to impose strong sanctions, including large fines, as well as possibly forcing the company's license to operate. In addition, individuals involved in violations may also face criminal prosecution.
Another drastic measure that the SEC can take is to impose sanctions, especially on companies that seriously violate SEC regulations. This is designed to prevent these companies from engaging in financial and securities activities in the United States, serving as a strong deterrent to protect market stability and the interests of Investors.
These powers are powerful tools that help the SEC maintain order and fairness in the financial system, while protecting investor interests and ensuring transparency in the securities trading environment.
Internal structure of the SEC
SEC operates under a complex organizational structure, combining expertise and efficiency in management. This structure includes many high-quality departments and personnel groups, each contributing to the SEC's comprehensive mission.
Internal structure of the SEC
The US Securities and Exchange Commission is a securities regulatory agency with a clear organizational structure. Including 4 members and 1 chairman, activities are Chia into 6 main divisions:
Chairman and commissioners: Headed by the chairman, along with 4 commissioners, whose task is to ensure strategic decisions of the SEC.
6 Main sets:
Division of Corporate Finance: Evaluates and ensures corporate compliance with securities regulations.
Division of Economic and Risk Analysis : Research on economics and risk to support policy decisions.
Division of Enforcement : Investigate and handle violations of securities laws.
Division of Examinations : Inspects and evaluates securities organizations to ensure compliance.
Division of Enforcement: Supervision of investment funds and asset management.
Division of Trading and Markets : Monitors trading floors and securities, ensuring fairness and transparency.
This structure is designed to ensure that the SEC has the ability to effectively supervise and regulate activities related to securities and financial markets, while ensuring compliance with rules and regulations to protect investors. invest and maintain fairness in the financial system.
SEC's influence on the crypto market
In the context that the United States is an international financial center, the SEC's powers, although only directed at the domestic market, still play an important Vai in global influence. In particular, the cryptocurrency sector, which is characterized by rapid innovation and rising risks, is gradually becoming the focus of attention from the SEC.
Current SEC Chairman (2023), Mr. Gary Gensler , opined that the cryptocurrency market carries many risks. In deciding to classify Bitcoin as a commodity rather than a security , he provided an important step in shaping the SEC's approach to other cryptocurrencies. He also emphasized that cryptocurrency businesses need to comply with regulations and must accept that they face strict scrutiny from the SEC.
With the goal of protecting investors, the SEC has made a series of important decisions, especially in lawsuits related to the world's two leading cryptocurrency exchanges, Binance and Coinbase . Allegations of Token being securities and non-compliant practices have roiled the cryptocurrency market and created a wave of concern. This has led to sharp drops in the prices of many Token , including Bitcoin , raising new challenges for the cryptocurrency community and investors worldwide.
Summary of outstanding events between the SEC and the crypto market
SEC v. Ripple
The legal battle between Ripple and the SEC has attracted major attention in the cryptocurrency industry. The SEC accuses Ripple of selling XRP Token Sale as an unregistered security, making more than $1.3 billion , while Ripple claims XRP is a Utility Token. This debate began in December 2020 when the SEC filed a report against Ripple and two of its executives.
SEC vs Ripple
After more than 2 years and on July 13, 2023, the judge decided that Ripple did not violate federal securities laws by selling XRP on public exchanges . However, the judge also decided that Ripple's sale of XRP to institutions was an unregistered offering of securities.
This is a win for Ripple. However, on August 9, the SEC announced that it was planning an appeal . The SEC has presented another lawsuit between the SEC and Terraform Labs , the organization involved in the historic LUNA-UST crash in May 2022 .
Judge Jed Rakoff, who is overseeing the case, said that Ripple's approach to the lawsuit could impact the litigation targeting Terraform Labs. He does not differentiate cryptocurrencies based on how they are sold, and he believes that selling directly to large, institutional investors, or through a third party to retail investors does not make it clear whether the Token is valid or not. must be securities or not.
The decisions in these two lawsuits made by Jed Rakoff cannot completely change the situation from the Ripple lawsuit, but may cause difficulties for Ripple in the future.
To proceed with the appeal, the SEC needs to obtain approval from the District Court for the Southern District of New York and the court of appeals. The new high court will then XEM the SEC's appeal. Ripple Labs also wants to buy time, possibly until the US Congress can enact legislation favorable to cryptocurrencies or when the US has a new president .
Coinbase and SEC
Leading cryptocurrency exchange Coinbase has made a strong move by suing the US Securities and Exchange Commission and demanding formal regulation of the digital assets sector, under the Procedures Act. Administration. In July 2022, Coinbase sent a petition and asked 50 questions about transparency in crypto regulations to the SEC.
SEC vs Coinbase
However, after 9 months, the SEC has not responded and Coinbase's Chief Legal Officer, Paul Grewal, commented that their move was to demand that the SEC announce its decision. Coinbase is facing many regulatory issues, including a legal battle with the US Treasury Department and plans to exit the US without clear regulation for the cryptocurrency industry.
The SEC lawsuit accuses Coinbase of violating US securities regulations with respect to trading and Staking of multiple cryptocurrencies. Coinbase has also been charged with being a securities broker, trader, and clearing house without being registered with the SEC since 2019. Although Coinbase was licensed to IPO in 2021, Coinbase faces demands for explanation from the government. covers 10 US states and if they do not respond within 28 days, they may be required to stop providing services in those states.
The legal battle between Coinbase and the SEC began in early 2023, when CEO Brian Armstrong revealed information about the SEC cracking down on cryptocurrency Staking activities. This information reduced the price of Bitcoin and sent Coinbase's COIN shares down 9% in the trading session on June 6. Coinbase users withdrew $57.5 million in cryptocurrency in the hour after the lawsuit announcement.
The initial response from Coinbase Chief Legal Officer Paul Grewal after the SEC lawsuit focused on expressing a lack of clarity in digital asset management. Grewal condemned the SEC's use of repression instead of establishing clear regulations, contributing to the loss of America's economic competitive advantage. He also criticized the SEC for refusing to provide necessary guidance and information to Coinbase and emphasized that the exchange will continue to operate as normal. Coinbase's COIN stock price dropped 9% after the lawsuit announcement. Previously, Binance was also sued by the SEC with similar allegations and later opposed the allegations and affirmed that it still operates normally on a global scale.
SEC sues CZ and Binance
In 2023, Binance and CEO Changpeng Zhao face pressure from the US Securities and Exchange Commission (SEC). The SEC's complaint in June accused Binance of mixing user funds and engaging in fraudulent practices. Since then, Binance has faced lawsuits in many countries and many senior managers have resigned.
SEC vs Binance
Binance has confirmed that CEO Changpeng Zhao resigned and Richard Teng was appointed as the new CEO . A settlement agreement with US authorities was reached with a fine of 4.3 billion USD to end the money laundering investigation and ensure the stable operation of the exchange. Changpeng Zhao pleaded guilty, was fined $50 million and banned from managing Binance for 3 years. Binance admitted shortcomings in legal compliance but committed to restructuring the organization to prevent risks.
SEC and Bitcoin ETF
Bitcoin ETF (also known as Bitcoin exchange-traded fund) is a group of assets linked to the price of BTC that are purchased, securitized and sold by companies or traded on traditional exchanges instead of exchanges. cryptocurrency.
BlackRock , the world's largest asset management fund, filed an application to establish a Bitcoin ETF with the US Securities Commission (SEC) on June 16. The ETF, called iShares Bitcoin Trust, will operate in a spot format, allowing investors to buy shares of the fund and receive Bitcoin as the underlying asset. The exchange will be NASDAQ and Coinbase has been chosen as the custody partner for the Bitcoin in the fund. Price data will reference the CME CF Bitcoin Reference Rate, ensuring consistency and reflecting actual value.
Large organizations such as Invesco, VanEck, WisdomTree, Fidelity and ARK quickly re-submitted their Bitcoin ETF registration application to the US Securities Commission (SEC) on the morning of July 1, right after the SEC announced the return of the ETF application. Bitcoin spot on the evening of June 30. This was a quick response from the institutions as the SEC assessed that recent Bitcoin spot ETF proposals have not provided details about the cryptocurrency exchange that would oversee the transaction.
The new filings are represented by Cboe stock exchanges, including WisdomTree, Invesco, Valkyrie, ARK Invest and Fidelity. All have added information about cryptocurrency exchange Coinbase, a custodial partner, even though Coinbase is facing a lawsuit from the SEC regarding its listing of cryptocurrencies as securities. contract.
On the evening of October 19, 2023, Grayscale filed a new application, using an S-3 filing, a shortened version of the S-1 commonly used for new stock offerings, after the SEC announced will not appeal the court's ruling regarding the proposed Bitcoin spot ETF.
Previously, at the end of September 2023, the SEC postponed the XEM of all Bitcoin spot ETF proposals by all Wall Street giants due to concerns about fraud and market manipulation.
Bitcoin spot ETF proposals are XEM by the SEC. Photo: Bloomberg (November 9, 2023)
Up to now, there are a total of 12 asset management giants waiting for a "ruling" from the SEC for their series of ETF documents. BlackRock is a pioneer in this race, along with VanEck, Bitwise, WisdomTree, Valkyrie, Fidelity, Invesco, ARK Invest, Global X, Hashdex and Franklin Templeton . On the morning of November 16, the Securities Commission also decided to delay two Bitcoin spot ETF proposals from Hashdex.
In general, the SEC only approves Bitcoin ETF futures applications and refuses to approve spot Bitcoin ETFs because of the high volatility, unregulated and easily manipulated nature of BTC. This suggests that it will be difficult for US investors to gain access to a spot Bitcoin ETF in the near future.
summary
Above is Coin68's article about the United States Securities and Exchange Commission, or SEC, an organization that has a great influence on the global economy as well as in the cryptocurrency market by playing a Vai. important role in protecting transparency and fairness in financial markets. However, the SEC currently has a negative perspective on the crypto market as lawsuits continuously appear.
Through the article, Coin68 hopes readers can better understand the Vai , nature and effects of the Fed on the markets. Good luck!
