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The US Securities and Exchange Commission (SEC) has officially denied Coinbase’s petition for crypto regulations. The regulator has long claimed that the crypto industry is well-regulated with the securities regulations, which fits the SEC’s claims that cryptocurrencies are securities.
However, Coinbase — as well as the rest of the crypto sector — disagrees. This is why the largest US exchange wanted the SEC to come up with the new crypto laws. Initially, the petition was filed last July, and at first, the SEC ignored it completely.
After Coinbase got the court involved, the regulator agreed to review the petition that asked that the SEC “propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods.” Now, however, the SEC held a 3-2 vote, leading to it denying the petition.
The securities watchdog also stated that it still disagrees with the claims that the current regime is unworkable for crypto securities. The SEC Chair, Gary Gensler, once again repeated that the existing securities laws appropriately govern crypto-asset securities.
It is also worth noting that the regulator also filed a lawsuit against Coinbase for operating its crypto trading platform. The SEC claims that Coinbase is an unregistered national securities exchange, broker, and clearing agency.
Coinbase’s petition did receive some support, including that from the Republican Commissioners Mark Uyeda and Hester Peirce. They voted in favor of the petition and said in a joint statement that it “raises issues presented by new technologies and other innovation.”
Coinbase to request a review of the decision
Coinbase’s chief legal officer, Paul Grewal, also commented on the new development. He said that no one looking fairly at the crypto industry could agree with the statement that the law is clear, or that there is no more work left to do regarding the matter of crypto regulations.
Today the SEC denied Coinbase’s petition for rules for crypto. After 18 months of silence, we went to court to get the response the law requires. With appreciation for the Third Circuit, later today we’ll again seek its help by challenging the SEC’s abdication of its duty. 🧵⬇️ pic.twitter.com/tFjiW53eF7
— paulgrewal.eth (@iampaulgrewal) December 15, 2023
Grewal added that the SEC should be working together with Coinbase and other crypto entities to create laws and rules that would benefit US innovation and consumers. Coinbase also notified a federal court of appeals in Philadelphia that it has plans to seek review of the regulator’s denial.
1/3 Promise made, promise kept: we are now on file with Third Circuit to challenge the SEC’s arbitrary and capricious denial of our petition for crypto rulemaking. We again appreciate the Court’s consideration.
— paulgrewal.eth (@iampaulgrewal) December 15, 2023
In its court filing, the exchange said that the SEC’s decision was “arbitrary and capricious,” calling it an “abuse of discretion.” The move once again confirms that the SEC has no intention to regulate the crypto industry. This might also lead to further doubt regarding the possibility of Bitcoin spot ETF approval which many in the industry are waiting for.