U.S. District Court Judge Amy Berman Jackson is allowing U.S. the Securities and Exchange Commission’s (SEC) lawsuit against Binance to proceed.
However, Judge Jackson also dismissed certain charges in the case.
The SEC accuses Binance of offering unregistered broker, trading, and clearing services for digital asset securities in the U.S.
In its ruling, the court upheld charges related to Binance’s initial coin offering (ICO), ongoing sales for BNB, BNB Vault, and staking services, as well as allegations of failure to register and fraud.
But Jackson also granted Binance’s motion to dismiss charges concerning secondary sales of BNB and Simple Earn.
The decision emphasized the evolving nature of tokens. Just because a token may have initially been considered part of an investment contract does not necessarily mean it retains that classification indefinitely.
Commenting on the ruling, Cody Carbone, chief policy officer at the Digital Chamber, highlighted the court’s clarification on the evolving nature of token classifications. He underscored the importance of distinguishing between tokens that function as securities and those that do not in today’s marketplace.
🚨🚨COURT RULES that just because a token was part of an investment contract in the past, it doesn’t mean it should always be considered a security.
Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia providing the clarity the #crypto industry…
— Cody Carbone (@CodyCarboneDC) June 29, 2024
The SEC’s approach to crypto regulation has been a subject of debate, with Judge Jackson criticizing the agency’s evolving stance and the lack of a comprehensive regulatory framework tailored to the crypto industry.
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U.S. Treasury implements tax reporting requirements for crypto
Meanwhile, the U.S. Treasury Department moved forward with long-awaited tax regulations targeting cryptocurrency transactions.
Under the new rules finalized on June 28, crypto brokers, including exchanges and payment processors, are now required to report users’ sales and exchanges of digital assets to the Internal Revenue Service (IRS).
This move, part of the $1 trillion bipartisan 2021 Infrastructure Investment and Jobs Act, seeks to tackle tax evasion in the crypto space.
The regulations are set to phase in from next year for the 2026 tax season. They are expected to align crypto tax reporting with existing requirements for traditional financial instruments like stocks and bonds.
Treasury officials noted adjustments were made from the original proposal to ease burdens on brokers and introduce the requirements gradually.
Lawrence Zlatkin, VP of Tax at Coinbase, welcomed the finalized regulations on X and commended the IRS for developing more practical rules focused on custodial brokers like Coinbase. He highlighted improvements in the implementation timeline and measures to prevent duplicate reporting.
Final crypto tax regs are here!
– We commend the IRS for developing more reasonable, rational rules that focus on custodial brokers, like @coinbase. The rules lay out a more practical timeline for implementation, and include a provision to prevent reporting duplication. 1/4— Lawrence Zlatkin (@LawrenceZlatkin) June 28, 2024
However, Zlatkin expressed concerns over the absence of a de minimis rule and the inclusion of non-financial transactions, advocating for rules comparable to those for traditional financial brokers.
The Treasury’s final rule also includes a provision setting a $10,000 threshold for reporting transactions involving stablecoins.
Supreme Court limits regulatory powers
In a separate development, the Supreme Court delivered a landmark ruling curtailing the executive branch’s authority to interpret laws, significantly impacting the regulatory powers of federal agencies.
The decision, which overturned the long-standing “Chevron deference” doctrine, empowers the judiciary to scrutinize agency actions more closely across various policy domains, including crypto.
It underscores a move towards greater judicial oversight, giving courts more influence over the scope and interpretation of federal agency regulations.
In response to this legal backdrop, Paul Grewal, Coinbase’s chief legal officer, took to X to highlight ongoing legal battles involving regulatory transparency.
Chevron: gone. Secondary sales in the Binance case: gone (more to say about that…). And now, late on a Friday, more stonewalling from @SECGov to stop Coinbase from obtaining documents from Gary Gensler in our litigation. 🧵⬇️
— paulgrewal.eth (@iampaulgrewal) June 29, 2024
Grewal criticized what he described as stonewalling tactics by the SEC, aimed at hindering Coinbase’s efforts to obtain documents from SEC Chair Gary Gensler as part of their litigation.
Coinbase has requested documents related to Gensler’s communications, arguing that they are crucial to revealing potential due process violations in the SEC’s enforcement actions.
This request stems from statements made by Gensler in March 2021, where he indicated the SEC’s limited regulatory authority over digital asset exchanges, a stance Coinbase believes is pertinent to their case against the regulator.
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