SEC and Coinbase Clash Over Cryptocurrency Regulations in Court

Summary

  • The five-member U.S. Securities and Exchange Commission declined to propose new cryptocurrency regulations under a 3-2 vote.
  • The SEC has countered the assertions from crypto exchange Coinbase that existing guidelines are not applicable to the cryptocurrency industry.
  • Coinbase has legally challenged the SEC’s decision, with a push for the SEC to devise a unique rule set in place for the cryptocurrency sector.
  • SEC Chair Gary Gensler affirmed that the current regulations apply to the crypto securities markets.
  • The regulatory body has legally pursued various cryptocurrency companies, including Coinbase, for alleged unregistered securities trading and listing.

SEC vs. Coinbase

The SEC, in a 3-2 vote by the five-member commission, declined to devise new cryptocurrency regulations. The decision was urged by digital currency exchange Coinbase, which contended that existing regulations are unfeasible for the crypto industry. Following the rejection, Coinbase revealed it has launched a legal review of the decision.

Crypto Tokens as Securities

The SEC, the top U.S. markets regulator, has been in an ongoing dispute with the crypto sector. The agency maintains that most crypto tokens are securities subject to its rules. The regulator has even sued several crypto businesses, including Coinbase, for dealing in crypto tokens that it claims must be registered as securities.

Gensler on Crypto Securities

“Current laws and regulations are applicable to the cryptocurrency securities markets,” stated SEC Chair, Gary Gensler. Coinbase disputed this claim, with Chief Legal Officer Paul Grewal stating, “No rational observer believes the law is clear or that more work isn’t needed.”

Coinbase’s Legal Pursuit

Coinbase shortly afterwards informed a federal appeals court in Philadelphia of its intent to challenge the SEC’s rejection. Denouncing the decision as erratic, detrimental and an overreach, the exchange is pressing for a dedicated crypto regulation framework through legal means.

Call for Clarity

Cryptocurrency firms have consistently sought clarity from the SEC regarding digital assets classifications as securities. In a statement, Gensler argued that by seeking the SEC to create rules, Coinbase has acknowledged the SEC’s jurisdiction over the cryptocurrency industry, a claim the exchange has refuted in the past.

Dissenting Opinions

Republican SEC Commissioners Hester Peirce and Mark Uyeda jointly voiced their dissent over the decision. They conveyed their standpoint that the petition initiated a discussion about new technologies.

This clash between regulatory bodies like the SEC and crypto industry titans like Coinbase could impact the risk appetite of forex traders, potentially causing more volatile fluctuations in associated assets such as the Bitcoin/USD trading pair.

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