SEC Withdraws Request to Classify ADA, MATIC, SOL as Securities in Binance Lawsuit

In a notable shift in regulatory stance, the US Securities and Exchange Commission (SEC) has withdrawn its request for a court ruling to classify certain cryptocurrencies

The US Securities and Exchange Commission (SEC) has withdrawn its request for a court ruling to classify certain cryptocurrencies as securities in its ongoing lawsuit against the cryptocurrency exchange Binance.

This development marks a significant shift in the SEC’s approach to the classification of these digital assets.

The SEC no longer views ADA, SOL and MATIC as securities

On July 30, 2024, the SEC filed a response to the court’s minute order issued on July 9, 2024. In the filing, the SEC indicated its intention to amend its complaint concerning what it previously referred to as “Third Party Crypto Asset Securities” in its opposition to Binance’s motion to dismiss.

The SEC stated that it is “no longer pursuing its request for a ruling on whether Third Party Crypto Asset Securities are securities at this time.”

This response follows the court’s earlier order, which directed the SEC to clarify its stance on the classification of these digital assets.

As previously reported by Cointelegraph, the SEC, in its initial complaint against Binance, had sought a court declaration that seven cryptocurrencies — ADA, SOL, MATIC, DOT, UNI, XTZ and FTT — were securities.

However, Binance, in its opposition to the SEC’s motion for partial judgment, argued that the SEC failed to identify which specific transactions involving these tokens were証券.

In its latest filing, the SEC acknowledged Binance’s argument, stating that it "cannot obtain a ruling on whether Third Party Crypto Asset Securities are securities without identifying the transactions at issue."

"The SEC is still investigating the transactions involving Third Party Crypto Asset Securities and will continue to pursue its claims relating to those securities in its amended complaint," the filing added.

While the immediate tokens affected by this retraction are ADA, MATIC, and SOL, other prominent cryptocurrencies are also likely to be impacted by the SEC’s broader classification efforts.

These include Binance Coin (BNB), Binance USD (BUSD), Cosmos (ATOM), The Sandbox (SAND), Decentraland (MANA), Axie Infinity (AXS), and COTI.

The SEC’s initial identification of at least 68 tokens as securities impacted a major segment of the cryptocurrency market, valued at over $100 billion.

SEC’s move coincides with increased pro-crypto political support in the US

This shift in the SEC’s stance could also be attributed to recent political developments in the United States.

As the US Presidential candidates continue to voice pro-crypto sentiments, these preferences are impacting regulatory attitudes.

Former President Donald Trump, in his election campaign, has promised to end the so-called “war on crypto” and expressed intentions to replace SEC Chair Gary Gensler with a more crypto-friendly figure.

Members of the Democratic Party, including Senator Kirsten Gillibrand, have simultaneously called for a more progressive approach to digital assets.

This adjustment by the SEC highlights a broader, evolving narrative in US regulatory attitudes towards cryptocurrencies, reflecting a growing recognition of the sector’s importance and potential.