US Chamber of Digital Commerce backs Binance in fight against SEC

The US Chamber of Commerce has filed an amicus brief questioning the US Securities and Exchange Commission’s authority as the agency proceeds with its case against Binance.

The Chamber posits the SEC’s regulation-by-enforcement approach not only stifles innovation but also prompts market participants to relocate offshore to avoid uncertain regulatory conditions in the US.

As a trade association, the Chamber aims to promote the adoption and use of digital assets and blockchain technology. Based in Washington DC, the organization serves as an advocate for public policy surrounding the asset class and the underlying technology that powers it.

A crucial part of the Chamber’s argument differentiates between what constitutes an “asset” and an “investment contract.” It argues that tokens — which can represent a wide array of rights — are not themselves investment contracts. 

As such, it argues that platforms trading these tokens shouldn’t automatically be categorized as securities exchanges. This line of reasoning directly challenges one of the SEC’s core allegations against Binance, which centers on the platform’s operation as an unregistered securities exchange due to its listing of multiple digital assets.

Binance allegations

The SEC argues the assets traded on Binance are securities under federal law, whereas Binance maintains they are commodities, putting them outside the SEC’s jurisdiction.

Additionally, the Chamber’s brief touches on constitutional issues, arguing that the SEC’s unilateral, regulation-by-enforcement actions could be at odds with the separation of powers and due process principles.

According to the Chamber, such tactics may exceed the SEC’s mandate and infringe on constitutional norms that underpin American governance.

“The SEC’s decision nevertheless to consider most digital assets as securities raises grave separation of powers concerns under the Major Questions Doctrine because the SEC is asserting jurisdiction over a major part of the economy that Congress did not intend for it to regulate,” it said.

While the Chamber’s filing holds no judicial weight, its influence and timing could prove pivotal as the exchange has faced increasing regulatory scrutiny, not only in the US but globally as well.

The arguments laid out in the brief also underscore a growing resentment from industry participants that questions the SEC’s regulatory scope and approach.

In a separate case involving the SEC and Coinbase in August, several similar briefs were submitted in defense of the exchange. 

Like Binance, those briefs argued that the SEC’s understanding of what constitutes an “investment contract” is both fundamentally misguided and at odds with existing legal precedent. 

They also further caution that a court decision siding with the regulatory body could have significant and broad ramifications for the cryptocurrency sector.

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