Updated December 16th, 2023 at 13:18 IST
Coinbase to challenge SEC's rejection of crypto rule petition
The disagreement between Coinbase and the SEC reflects a broader ongoing conflict between the cryptocurrency sector and the top US markets regulator.
The US Securities and Exchange Commission (SEC) has rejected a petition by Coinbase Global, the country's largest cryptocurrency exchange, seeking new rules for the digital asset sector. The SEC's decision, which came in a 3-2 vote, said that it would not propose new regulations, as it fundamentally disagreed with Coinbase's assertion that existing regulations are "unworkable" for the crypto sphere.
Coinbase, in response to the SEC's decision, has announced its intention to challenge the ruling in court. The exchange notified a federal appeals court in Philadelphia of its plans to seek judicial review of the SEC's denial.
The disagreement between Coinbase and the SEC reflects a broader ongoing conflict between the cryptocurrency sector and the top US markets regulator. The SEC has consistently maintained that most crypto tokens are securities and fall under its jurisdiction. The regulatory agency has taken legal action against several crypto companies, including Coinbase, alleging that they listed and traded tokens that should be registered as securities.
SEC Chair Gary Gensler supported the decision, stating, "Existing laws and regulations apply to the crypto securities markets." Coinbase's Chief Legal Officer, Paul Grewal, countered this claim, stating, "No one looking fairly at our industry thinks the law is clear or that there isn’t more work to do."
Coinbase had previously urged the SEC to create a specialized set of rules for the crypto sector in 2022, arguing that existing US securities laws are inadequate. The company's appeal to a judge in April to force the SEC to respond to the petition was unsuccessful, as the court decided not to intervene.
Gensler argued that by requesting the SEC to draft rules, Coinbase implicitly acknowledged the SEC's authority over the crypto sector. This assertion contradicts Coinbase's previous refutation of the SEC's jurisdiction.
Republican SEC Commissioners Hester Peirce and Mark Uyeda issued a joint statement expressing their disagreement with the SEC's decision. They emphasized the importance of addressing issues raised by new technologies and innovations, considering it a core responsibility of a regulator.
The crypto industry has been calling for clearer guidelines from the SEC on when a digital asset is deemed a security. The ongoing dispute underscores the challenges of regulating a rapidly evolving and innovative sector.
(With Reuters inputs)
Published December 16th, 2023 at 13:18 IST