On Friday, the SEC publicly said no to a Coinbase petition that sought to clarify securities laws applicable to cryptocurrencies. After that, the exchange went to court again, while two SEC commissioners showed their support for the platform.
SEC says no to Coinbase petition
On July 21, 2022, Coinbase surprised the cryptocurrency ecosystem by launching a petition to try to force the hand of the Securities and Exchange Commission (SEC) to the latter clarifies securities laws.
And for good reason, we’ve repeatedly noted vagueness surrounding the terms under which the SEC does or does not consider a cryptocurrency a security.
👉 What is security and what does it mean for cryptocurrencies?
After the regulator used all means to delay its response and justice forced it to pass judgment, a press release was issued this Friday and the answer could be summed up in one word: no.
So the SEC is denying the petition, and SEC President Gary Gensler himself said he was glad to support the decision, for three reasons:
“First, existing laws and regulations apply to the crypto securities markets. Second, the SEC also addresses the crypto securities markets through rulemaking. Third, it is important to leave the Commission free to set its own regulatory priorities. »
The person then develops a long presentation in which he counters Coinbase’s arguments point by point. It therefore believes that current laws alone are sufficient to define whether the sale of cryptocurrency constitutes an offer of security and that there is no urgent need to modify the regulatory framework.
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Coinbase takes legal action again
Despite this disappointment, the cryptocurrency platform behind the petition did not admit defeat and its legal director, Paul Grewal, filed a new lawsuit to take the case to the Third Circuit.
In that letter to the appeals court, he describes the SEC’s decision as “arbitrary and capricious»:
1/3 A promise made, a promise kept: we are now headed to the Third Circuit to challenge the SEC’s arbitrary and capricious denial of our crypto rule petition. Again, we appreciate the Court’s assessment.
— paulgrewal.eth (@iampaulgrewal) December 15, 2023
At the same time, Brian Armstrong echoed the words of his legal directorand now questions the reasons pushing the SEC to refuse to clarify the regulatory framework:
Nice little win. We went to court to challenge the SEC’s refusal to create clear rules for the industry—and it worked (the court forced them to respond).
Now that they have formally responded (no!) we can challenge their response in court which will help us take step… https://t.co/3RcTk1OVcp
— Brian Armstrong 🛡️ (@brian_armstrong) December 16, 2023
👉 Also in the news — SEC: Gary Gensler admits he’s being forced to rethink Bitcoin ETF
Despite the negative response from the US financial police, it is important to note that at least 2 of his 5 commissioners opposed this decision. They are Hester Peirce and Mark Uyeda.
The two people released a press release in turn to make their position known and encourage other cryptocurrency players try to change the status quoespecially calling for round tables or requests for comments:
“We hope that stakeholders will continue to propose specific rule changes, guidelines, and exemptions that would provide a useful foundation for the crypto industry to continue its development in the United States.” While we are disappointed that the Commission will not be hosting these important conversations, we will continue to listen to the conversations held by others and the ideas that emerge. »
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Source: SEC
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