Crypto.com sued the US Securities and Exchange Commission (SEC). The crypto exchange claims the SEC has expanded its jurisdiction beyond statutory limits regarding its interpretation of crypto assets as securities.

This lawsuit followed a Wells notice by the regulator against the company. In its statement, the exchange argued that the SEC had imposed an unlawful rule categorizing most crypto transactions as securities, while transactions involving Bitcoin (BTC) and Ether (ETH) escape this classification.

Clarity in Crypto Regulations

In addition to the lawsuit, Crypto.com Derivatives North America (CDNA) petitioned the Commodity Futures Trading Commission (CFTC) and the SEC for clarification on the regulation of certain cryptocurrency derivative products. Crypto.com maintains that the distinction by the regulator lacks a foundation in law and ignores the similarities between these assets.

“Specifically, our lawsuit contends that the SEC has unilaterally expanded its jurisdiction beyond statutory limits and separately that the SEC has established an unlawful rule that trades in nearly all crypto assets are securities transactions no matter how they are sold, whereas identical transactions in bitcoin (BTC) and ether (ETH) are somehow not,” Crypto.com mentioned.

The petition seeks to confirm that these products fall exclusively under the jurisdiction of the CFTC. The company highlighted the Dodd-Frank Act, a regulation that facilitates joint interpretations between regulatory bodies.

SEC to Respond

Under the joint rules, the CFTC and SEC have 120 days to respond to the petition, either by issuing an interpretation or providing written justification for denial. This process is designed to enhance regulatory clarity for market participants.

Expect ongoing updates as this story evolves.