In a recent development, the U.S. Securities and Exchange Commission (SEC) has urged a judge to dismiss an appeal made by popular cryptocurrency exchange, Coinbase. This appeal, submitted last year by Coinbase, requested the SEC to provide clarity on the application of securities laws to cryptocurrencies.
Coinbase’s Call for Public Participation
The appeal by Coinbase came after the company expressed dissatisfaction with the SEC’s response, stating it as neither prompt nor justifiable. Coinbase’s proposal calls for a public notice-and-comment procedure, advocating for more public involvement, aligning with the company’s mission to democratize finance.
SEC Chairman Gary Gensler, in a court document filed on May 15, dismissed Coinbase’s accusations as groundless. Gensler has repeatedly claimed that most cryptocurrencies should be classified as securities under existing rules. This stance has faced opposition from leading figures in the crypto industry, who argue against the blanket application of traditional securities laws to digital assets.
Coinbase’s Reaction to SEC’s Position
Coinbase’s Chief Legal Officer, Paul Grewal, responded to the SEC’s recent motion, stating that this could be a landmark instance where the SEC has officially articulated its position on establishing rules for the crypto industry in court.
In the SEC’s court filing, it was emphasized that any regulatory changes would necessitate careful consideration, referring to it as a “necessarily complicated endeavor.” The SEC clarified that there is no specific timeline to conclude this process. Furthermore, they maintained that Coinbase hasn’t experienced any harm as the SEC has yet to act on the appeal.
The SEC also underscored its power to respond to the appeal and uphold existing legal responsibilities while considering possible amendments. Coinbase’s appeal, according to the SEC, essentially requests the commission to perform a sequence of discretionary tasks. Further, these tasks would substitute current securities laws with a new, comprehensive regulatory framework for crypto assets deemed as securities.
SEC’s Tougher Stance on Crypto Companies
The SEC has recently intensified its enforcement actions against cryptocurrency companies, signaling a shift in its regulatory tactics. Major industry players, such as Kraken, Coinbase, and Binance, have landed in the SEC’s spotlight, highlighting the growing friction between conventional financial regulations and the emerging cryptocurrency domain.