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SEC Clashes with Coinbase, Pushes Back Against Regulations
- The U.S. Securities and Exchange Commission rejected Coinbase Global’s request for new digital asset rules.
- The regulator maintains that existing regulations suffice and continues its stance of treating most cryptos as securities under its authority.
- Coinbase’s request for specific regulations highlights a division within the agency and underscores the ongoing debate over the applicability of existing securities laws to the unique characteristics of crypto.
SEC Says ‘No’ to Crypto Rules
The United States Securities and Exchange Commission (SEC) is staying true to its stance that crypto needs no new regulation and that “the rules of the road are clear.”
The SEC denied Coinbase Global’s request for new digital asset sector rules in a 3-2 vote. The regulator disagrees with Coinbase’s assertion that existing regulations are not working for crypto. This denial continues the ongoing conflict between the crypto sector and the SEC, which considers most crypto tokens as securities under its authority and has sued multiple crypto companies, including Coinbase, for listing unregistered securities.
Existing laws and regulations apply to the crypto securities markets.
Gary Gensler, SEC Chair Coinbase’s Plea for Clarity
In 2022, Coinbase Global approached the SEC, urging them to create a specific set of rules for the crypto sector. Coinbase argued that the existing U.S. securities laws were not suitable for the unique characteristics of crypto. Earlier this year, as the SEC had not responded, Coinbase took the matter to court to get the SEC to respond to their petition.
The judge decided to not force the SEC to action based on its plans to respond to Coinbase which it now did. The SEC response was not received well by Coinbase, understandably.
No one looking fairly at our industry thinks the law is clear or that there isn’t more work to do.
Paul Grewal, Coinbase Chief Legal Officer SEC Commissioners Hester Peirce and Mark Uyeda, both Republicans, said they disagreed with the SEC’s decision, arguing that the Coinbase petition raises important issues brought about by technological innovation.
The response by another anti-regulation, pro-enforcement supporter, Gurbir Grewal, the Director of the SEC’s Division of Enforcement, highlights the political division the regulator and much of the US is facing.
You simply can’t ignore the rules because you don’t like them or because you’d prefer different ones: the consequences for the investing public are far too great.
Gurbir Grewal, SEC Director Division of Enforcement 
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
