SEC and its role in regulating the cryptocurrency market: why decisions from the US shake the entire world

If you are an active participant in the cryptocurrency market, you have likely noticed how news about SEC actions cause waves of panic among traders worldwide. But what exactly is behind the abbreviation SEC, and why does a small American agency hold such enormous power over decentralized finance? Let’s try to understand this issue in detail.

What is the Securities and Exchange Commission

The U.S. Securities and Exchange Commission (SEC) is a federal agency established in 1934 in response to the financial crisis. Its main function is to regulate and oversee all securities operations within the United States, protect investors’ rights, and prevent financial fraud.

Current SEC Chairman Gary Gensler has gained notoriety for his strict approach to the cryptocurrency industry. He maintains the position that most digital assets should be considered securities and subject to strict oversight, except for Bitcoin, which is classified as a commodity.

Internal structure and scope of influence of the SEC

The Commission’s structure includes several key divisions:

• Investment Management — oversees investment funds and advisors
• Corporate Financial Regulation — monitors issuer reporting
• Market Trading Department — supervises trading operations
• Enforcement Division — conducts investigations of violations
• Analytical Center — analyzes risks and innovations in the market

Although the SEC’s jurisdiction is limited to U.S. territory, its decisions have influence far beyond American borders. This is because the U.S. financial market remains the largest in the world, and many cryptocurrency exchanges and projects have representations in the United States.

How the SEC perceives the cryptocurrency sector

Under Gensler’s leadership, the SEC views the crypto industry as an area requiring maximum control. The agency is actively pursuing initiatives to regulate token issuance, trading on exchanges, and all aspects related to the circulation of digital assets.

The Commission frequently uses lawsuits as a regulatory tool. In recent years, the SEC has filed numerous lawsuits against major players in the crypto market, accusing them of trading unregistered securities.

High-profile legal battles that shook the market

Case against Ripple and the XRP token

In late 2020, the SEC initiated legal proceedings against Ripple, claiming that the company raised over $1.2 billion through the sale of unregistered securities. This legal battle has been ongoing for a long time and has become a symbol of the confrontation between regulators and the crypto industry. The price of XRP significantly dropped during the legal proceedings.

Lawsuits against major trading platforms

The SEC has repeatedly filed claims against trading platforms, asserting that they provide access to unregistered tokens. These actions triggered mass sell-offs and panic in the market.

Regulation of stablecoins

In early 2023, the SEC filed a lawsuit against the issuer of the BUSD stablecoin, classifying it as an unregistered security. The subsequent devaluation of the asset forced users to urgently switch to other solutions like USDT and USDC. However, the SEC continues to closely monitor these stablecoins as well, demanding compliance from their issuers with established standards.

Long-term implications for the cryptocurrency ecosystem

SEC actions have a cascading effect on the entire crypto ecosystem. Every new lawsuit or regulatory statement causes market volatility, influences investor behavior, and forces crypto companies to adapt their business models.

The SEC is also gradually expanding its control over the decentralized finance (DeFi) sector, raising serious questions about the future development of this sector. The agency demands that operations in DeFi comply with the same standards as traditional financial services.

Conclusion

The U.S. Securities and Exchange Commission is a powerful regulator whose actions shape trends in the global cryptocurrency market. Understanding its goals, structure, and approaches is essential for any participant in the crypto ecosystem. In an environment of increasing regulation, investors and projects need to closely monitor developments and adapt their strategies accordingly.