TL: DR
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A CFTC official hopes to find a resolution in the legal battle with Binance but says no decision has been made yet.
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The regulator sued Binance last month alleging the platform solicited U.S. users and allowed them to trade derivatives without authorization.
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The CFTC official also expressed hope that Congress will introduce crypto-specific rules soon to deal with spot market oversight.
No decision has been taken yet on whether to settle the case or take it to court in the legal battle between Binance and the Commodity Futures Trading Commission (CFTC). Kristin N. Johnson, the commissioner at the CFTC, has said that the regulator has been in conversations with Binance to address its concerns about the company’s conduct. The CFTC sued Binance, its CEO Changpeng Zhao, and its former chief compliance officer last month, alleging the platform solicited users in the US through its platform and allowed them to trade derivatives despite not being authorized to do so. Binance said it would stop operating in the US in 2019.
Johnson said in an interview with CNBC’s Arjun Kharpal on Tuesday, “We’ve been in continuing conversations with the business to describe what we understand is potentially problematic conduct and to give them an opportunity to explain that conduct and to help us find a path forward…As of the moment, we can conclude that there is not immediate path forward. That doesn’t mean there couldn’t be one and hopefully there will be one.”
The Binance group, unlike its US affiliate Binance.US, isn’t regulated in the US. The company has frequently faced criticism for operating in various jurisdictions, including the UK, Italy, and Singapore, without approval.
Crypto companies have faced tougher scrutiny in the US later in the wake of the $32 billion flameout of crypto exchange FTX and a slew of other industry collapses and a plunge in prices which caused hefty losses for investors.
On Monday, Coinbase filed suit against the US Securities and Exchange Commission, making good on a vow made by CEO Brian Armstrong last week to take the regulator to court. Coinbase suggested the regulator should be forced to clarify whether it would allow the crypto industry to be regulated under existing securities laws.
Johnson said she hopes that Congress will step in to introduce crypto-specific rules soon.
“I do think that we’ll have to be really careful to have dynamic regulation that is not just responsive to the asset classes that we see in the market today but that gives us the flexibility and capability to respond as entrepreneurs and innovators, coders and developers of software protocols continue to release more and more interesting asset classes and products and financial markets,” she said.
“Under immediately existing laws, there is a provision to understand how securities laws would apply to any digital assets that qualify as securities. And those the same in the context of commodities,” Johnson said.
“However,” she added, “it is imperative that Congress step up and make plain what their preference is in terms of how to deal with the spot market oversight. I think that’s the singular space, if we went very narrow, specifically to your uncertainty point, that spot market oversight, that definitional piece is very critical. And I think it’s helpful for us if Congress assists us and gives us that guidance.”
The legal battle between Binance and the CFTC continues, and no decision has been taken yet on whether to settle the case or take it to court. The CFTC has been in discussions with Binance to address concerns about the company’s conduct, and Johnson has expressed hope that a path forward can be found. The crypto industry is still largely unregulated but calls for it to be brought within the regulatory fold have grown following recent blowups in the space, such as the implosion of crypto exchange FTX and stablecoin firm Terra.
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