April 22, 2024

Bitstamp Halts U.S. Trading for Select Cryptocurrencies Amid Regulatory Scrutiny

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Cryptocurrency exchange Bitstamp announced on August 8 that it will suspend U.S. trading for several cryptocurrencies that have been recently classified as securities in legal actions against major exchanges Binance and Coinbase. The decision is part of Bitstamp’s proactive response to evolving regulatory dynamics, leading to the discontinuation of trading for certain tokens, while urging U.S. customers to finalize their trades within a specific timeframe.

The affected cryptocurrencies include Axie Infinity (AXS), Chiliz (CHZ), Decentraland (MANA), Polygon (MATIC), Near Protocol (NEAR), The Sandbox (SAND), and Solana (SOL). According to Bitstamp’s official statement, U.S. users will be prohibited from trading these tokens as of August 29. After this date, trading for the mentioned cryptocurrencies will be “permanently disabled” for U.S. customers. However, the exchange has emphasized that U.S. users can continue to withdraw and hold these tokens following the deadline.

Bitstamp’s decision to delist the identified tokens comes as a response to recent developments and a consistent review of the regulatory landscape. While the exchange did not explicitly elaborate on the nature of these developments, it is noteworthy that all the affected cryptocurrencies are assets that the U.S. Securities and Exchange Commission (SEC) has classified as securities in legal cases against Coinbase and Binance, two of the largest and most influential centralized cryptocurrency exchanges.

Notably, Bitstamp has chosen not to delist certain tokens that were also named in the aforementioned legal cases. Cardano (ADA), Nexo (NEXO), and Algorand (ALGO) will remain listed on the exchange, although the specific reasons behind this decision was not clarified. Other cryptocurrency platforms, such as Revolut, Bakkt, and Robinhood, have recently chosen to delist Cardano (ADA), Polygon (MATIC), and Solana (SOL) in response to similar regulatory considerations.

The focus on these specific cryptocurrencies appears to stem from their significant market presence and recognition by the SEC. However, the involved cryptocurrency projects have rejected the SEC’s characterization of their tokens as securities. IOHK, the parent company of Cardano, has emphatically denied the security status of ADA. Similarly, the Solana Foundation has expressed its disagreement with the SEC’s assertions, while Polygon Labs has maintained that its operations were primarily conducted beyond the U.S. jurisdiction.

The actions taken by Bitstamp and other platforms with regard to the delisting of these tokens can be perceived as a preemptive measure to navigate the evolving regulatory landscape. The industry is awaiting further clarity from regulatory bodies, particularly the SEC, on whether additional actions will be taken against the identified tokens or other platforms in the future.

As the regulatory environment continues to evolve, cryptocurrency exchanges are proactively adjusting their offerings to align with emerging legal considerations, prioritizing compliance and user protection. The industry’s response underscores its commitment to fostering a secure and compliant ecosystem while maintaining access to a wide array of digital assets.

Janine Partis
Digital Assets Desk

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