The crypto community has recently been on edge due to statements by the United States SEC. After the US SEC claimed that AMP was a security last month, Binance.US will delist the token “out of an abundance of caution.” In response to the Binance.US announcement, AMP fell on Monday. In January 2021, Binance.US made a similar move with XRP, following the case between the SEC and Ripple.
Binance.US announced Monday that it would shut down Amp (AMP) deposits and remove the AMP/USD trading pair on August 15, citing the coin’s appearance in a legal complaint from the US SEC. In July, the federal regulator filed a complaint against a former Coinbase product manager and two individuals, alleging that AMP and eight other cryptocurrencies were “crypto asset securities” covered by the SEC.
The AMP cryptocurrency fell below the first major support level at $0.00887 and the second major support level at $0.00863. AMP increased in price after finding support at the Third Major Support Level at $0.00813. However, on Monday, August, the price decreased in response to the SEC labeling AMP and eight other cryptos as securities. This caused a decline in prices across the board for cryptocurrencies.
In the SEC complaint, AMP is the only cryptocurrency among the nine mentioned that is currently available for trade on Binance.US. The platform stated that trading of AMP “may resume at a later date,” but provided no timeline. The agency may examine any crypto exchanges or organizations that list the token, as well as Powerledger (POWR), Kromatika (KROM), DFX Finance (DFX), Rally (RLY), Rari Governance Token (RGT), DerivaDAO (DDX), LCX and XYO.
"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."
The SEC’s investigations, labeling of cryptos, and the Binance.US delisting may set legal precedence and provide the SEC greater power over the crypto market. Although there is no formal crypto regulatory framework or jurisdiction over digital assets, US-based cryptocurrency exchanges like Binance.US and other crypto trading platforms may be required to delist any cryptocurrency that the SEC deems a security.
The SEC’s claims might have far-reaching consequences in addition to the single case, emphasizing how crucial and pressing it is for regulators to collaborate. On July 21, the SEC filed insider trading charges against a former Coinbase (COIN) product manager and two other people. The SEC’s decision to characterize the nine cryptocurrencies as securities may have far-reaching consequences in the cryptocurrency market.
The most important distinction between a security and an investment is how much the token resembles shares issued by a company seeking capital. The SEC employs a legal test from a 1946 US Supreme Court decision to determine this. The SEC may consider an asset as security if investors raise or inject cash intending to benefit from the company’s leadership’s efforts.
To be able to sell assets to investors in the United States, these tokens’ creators will also have to follow the country’s securities regulations. Such designations would make running a crypto exchange more expensive and complex. Furthermore, exchanges would face continuous scrutiny by regulators. This could lead to penalties, fines, or prosecutions if criminal authorities get involved. This might result in future funding from investors fleeing the market due to concerns over increased compliance obligations and regulatory investigation. More consequences will develop as the SEC’s decisions are implemented.