Crypto Tokens' Status as Securities or Commodities Is Key to SEC's Binance, Coinbase Suits: Bernstein

Regulation of the industry has become a political debate and a turf battle between the SEC and CFTC, the report said.

AccessTimeIconJun 7, 2023 at 10:41 a.m. UTC

Whether cryptocurrency tokens are securities or commodities is at the heart of the U.S. Securities and Exchange Commission’s allegations against crypto exchanges Binance and Coinbase (COIN), Bernstein said in a research report Tuesday.

The first judicial clarity on the matter will come from the SEC’s action against Ripple, the report said. A potential judgement on that case is expected later this year and will set the tone for the industry in the near term.

The regulator said on Monday that it was suing Binance, Binance founder and CEO Changpeng “CZ” Zhao and the operating company for Binance.US on allegations of violating federal securities laws. A day later it sued rival exchange Coinbase on similar charges.

Crypto regulation has become a “completely political debate between Republicans and Democrats,” Bernstein said.

“The intent seems to build a functional framework for digital commodities and payments stablecoins – providing the Commodity Futures Trading Commission (CFTC) more regulatory authority than the SEC,” analysts Gautam Chhugani and Manas Agrawal wrote.

Given that the CFTC had already sued Binance alleging misconduct for attracting U.S. investors to its offshore derivatives platform, it was expected the SEC would follow, alleging securities violation and therefore implying that most tokens are securities.

The U.S. regulatory action is unfortunate, but not an “existential” risk, Bernstein said.

Most capital that had to leave the cryptocurrency market is already out, and the bad news appears to be fully priced in, with both bitcoin (BTC) and ether (ETH) trading up by around 3% after the event, the report said.

Edited by Sheldon Reback.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Author placeholder image

Will Canny is CoinDesk's finance reporter.

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.