The SEC denied Coinbase’s request for new crypto rules. Chairman Gary Gensler supports the decision.
In a recent announcement, the U.S. Securities and Exchange Commission (SEC) rejected a request from Coinbase, one of the world’s leading cryptocurrency exchanges, to enact new regulations regarding cryptocurrency assets. This decision demonstrates the SEC’s position that the current regulatory framework is strong enough to handle the cryptocurrency market without any problems.
SEC Chairman Gary Gensler supports this decision
The Securities and Exchange Commission (SEC) rejected Coinbase’s appeal for new regulations for digital assets, arguing that the existing regulatory framework is applicable. Last Friday, SEC Chairman Gary Gensler supported the decision, saying the current law is already relevant to the cryptocurrency sector.
According to Gensler, existing laws and regulations are already applicable to the cryptocurrency securities market. He noted the broad definition of securities in the 1933 and 1934 laws that covered more than just stocks and bonds, including “investment contracts.”
He also pointed to the Supreme Court’s decisions in Howey and Reves, which were the basis for determining what constitutes a security. These examples highlight the economic reality of the transaction rather than its form. This approach has continued to be applied to cryptocurrency assets, and federal courts have found these standards workable.
The SEC noted that if cryptocurrency assets are offered and sold as securities, they must go through a disclosure process established by Congress. This is very important considering the numerous fraud schemes in the cryptocurrency industry. The statement also dismissed the notion that it is impossible to identify the “issuer” of crypto-asset securities.
The SEC focuses on registration compliance.
The SEC emphasized the importance of registration and compliance for brokerages in the cryptocurrency asset market. The Committee also addressed ongoing rulemaking efforts related to crypto-asset securities. He disagreed with the petitioner’s suggestion that the current moment was appropriate for his proposed regulatory action.
The SEC also noted that it is actively participating in several initiatives that could shape future regulatory changes. This includes special purpose broker-dealer releases and other offerings regarding crypto-asset securities.
The SEC’s statement demonstrated how important the Commission’s autonomy is in determining its rulemaking agenda. Recognizing that cryptocurrency markets constitute a small portion of broader capital markets, the SEC is turning its attention to sectors that require more immediate regulatory updates.
Coinbase is an unregistered stock exchange and sought a formal response from the agency in 2022 before facing the SEC lawsuit. This year, it also approached a federal court to expedite the SEC’s response.
In a two-page response, the SEC denied Coinbase’s claim that existing securities laws do not apply to cryptocurrency assets. After a thorough review, the five-member committee rejected the petition for new rulemaking, saying it was unnecessary.