JPMorgan Chase & Co
According to the report, the SEC believes that the majority of cryptocurrencies should be categorized as securities. Consequently, this would mean that most cryptocurrency companies and trading activities would be subject to SEC oversight and comply with the regulatory measures applicable to traditional securities.
The report, spearheaded by analyst Nikolaos Panigirtzoglou, noted this isn't a "straightforward legal case," as there is ambiguity surrounding which cryptocurrencies should be classified as securities.
The report referred to the ongoing SEC versus Ripple case as an exemplification of the murkiness in the legal landscape.
Last week, the SEC announced it was taking legal action against Binance, its founder and CEO Changpeng "CZ" Zhao, and the company behind Binance.US.
The allegations are centered on breaches of federal securities laws.
In quick succession, the SEC filed a lawsuit against Coinbase on similar grounds.
JPMorgan stated these developments are "creating more urgency for U.S. lawmakers to come up with a comprehensive regulatory framework by this year."
JPMorgan further highlighted that until a clear regulatory structure is in place, cryptocurrency activities will likely keep shifting away from the U.S. toward decentralized entities and crypto venture capital funding may stay muted.
The bank's report conveyed that if the SEC's viewpoint gets legislative backing, Coinbase, Binance.US and other American exchanges might have to register as brokers, and most cryptocurrencies would be regarded as securities.
The report remarked that while this could prove to be "onerous and costly" for the crypto sector, it would also yield benefits.
It stated, "Crypto markets would be properly regulated and offer more transparency and investor protection."
Additionally, JPMorgan observed that the SEC's recent actions have engendered uncertainties surrounding various Layer 1 tokens purported to be securities, giving Bitcoin and Ethereum a comparative edge.
