SEC Rejects Coinbase’s Petition For Crypto Regulation Clarification
Prominent crypto exchange Coinbase has faced a setback in its attempt to seek clarification on crypto regulations from the U.S. Securities and Exchange Commission (SEC). In response to Coinbase’s petition, the SEC stated that it is not obligated to address the exchange’s requests.
JUST IN: 🇺🇸 SEC says #crypto regulatory clarity may take years and they're in no rush.
— Watcher.Guru (@WatcherGuru) May 16, 2023
Coinbase’s Crypto Regulation Clarity Request
The regulatory agency argued that Coinbase’s proposal for comprehensive reforms and rulemaking within a limited timeframe is a complex task. The SEC emphasized that it is not required by securities laws or the Administrative Procedure Act to issue broad new regulations concerning digital assets, as requested by Coinbase.
Coinbase’s chief legal officer, Paul Grewal, expressed disappointment with the SEC’s response, referring to it as a “resounding maybe.” Grewal took to Twitter to express his thoughts, stating that it could take several years for the SEC to provide regulatory clarity to the cryptocurrency industry. However, he acknowledged that this filing marked the SEC’s formal articulation of its position on developing regulations for the industry. Grewal further noted that the SEC plans to use enforcement actions instead of rulemaking in the near future, but these actions may eventually “inform” future rulemaking.
We look forward to the opportunity to reply formally next week. And as always, we continue to appreciate the Court’s careful consideration. 7/7
— paulgrewal.eth (@iampaulgrewal) May 16, 2023
Disconnect over Crypto Regulations
Grewal also highlighted a disconnect between the SEC’s stance and the statements made by its chair, Gary Gensler. Gensler has consistently emphasized the need for adequate regulations and has advocated for categorizing a significant portion of the cryptocurrency market as securities. However, the SEC clarified that Gensler’s public statements are not formal guidance or policy statements from the agency.
The SEC’s filing also criticized Coinbase, stating that the exchange’s own submissions indicate the complexity of the issue. The agency noted that Coinbase filed its rulemaking petition less than ten months ago, supplemented it less than three months ago, and recently sought to supplement the record again.
While Coinbase’s attempt to seek clarity on the ambiguous regulatory treatment of cryptocurrencies in the U.S. has encountered obstacles, Grewal addressed the situation. Despite the SEC’s response, Coinbase remains committed to pursuing regulatory clarity and advocating for a comprehensive framework that supports innovation and protects investors in the cryptocurrency industry.