The SEC will soon target crypto exchanges, according to a Ripple lawyer

According to an attorney representing Ripple in a case against the Securities and Exchange Commission (SEC), the government will soon pursue cryptocurrency exchanges.

The SEC will'soon' target crypto exchanges, according to a Ripple lawyer

On Twitter, John Deaton, a Ripple (XRP) advisor, has been very vocal about the ongoing lawsuit between the SEC and Ripple Labs. The defendants in the case are attempting to obtain a summary judgment on whether XRP is a security and whether information protection fair reporting is possible as the action nears its (hopefully) conclusion.

The SEC, on the other hand, has been very proactive in keeping the discovery process alive, generating further delays and some of the toughest correspondence ever seen in a lawsuit of this scope.

Deaton's tweet came after the Securities and Exchange Commission proposed new rules requiring platforms to report the fair value of digital assets held for users on corporate balance sheets.

According to Deaton, this is the first stage in the regulator's plan to pursue proceedings against these exchanges this summer. The commission's recent guidance appears to have an impact on crypto exchanges, DeFi platforms, and custodian service providers in general. The advisory opinion, on the other hand, did not give the much-needed clarification that the community had hoped for.

Instead, the new regulations will add to the existing complicated and unclear legislative structure that safeguards space. The SEC highlighted a 2020 research on stolen funds from crypto platforms in 2018 in its recommendation, which indicated to many dangers related with crypto asset security.

Despite many requests over the years, the agency acknowledged that it had declined to offer regulatory clarity. Chairman Gary Gensler of the Securities and Exchange Commission (SEC) indicated in January that the commission would study the modifications more seriously in 2022.

Has the SEC overstepped its bounds?

While this could be the first step toward establishing a regulatory framework, there are concerns that the watchdog's scope will be expanded.

Recent attacks in the crypto business, which prompted these new regulatory rules, accord with Gensler's claims, including unsecured loans made to Coinbase by individuals acquiring crypto.

All digital assets owned by investors on a platform will be deemed platform assets under the new criteria. This will largely effect company balance sheets and bring them under the SEC's oversight.

Coinbase recorded $21.3 billion in assets and liabilities on its balance sheet last year, far less than the $278 billion in digital assets it controlled. Any corporation with assets above $50 million is automatically subject to the SEC's control under the SEC's registration requirements.

As a result, if the digital asset is added to their balance sheets, liquidity providers and automated market makers may have no choice but to register with the SEC. Other recommendations include include crypto market participants in the definition of a Government Securities Dealer or Dealer, among others.

They will eventually have to register with the SEC and adhere to federal securities rules and regulations.

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