YEREVAN (CoinChapter.com) – Brian Armstrong, the chief executive of Coinbase, the largest US-based crypto exchange, called the US Securities and Exchange Commission’s Dec. 15 decision to dismiss the petition for a new regulatory framework “beneficial” for crypto.
However, before analyzing the CEO’s response, let’s take a quick look at the petition itself and what Coinbase tried to achieve.
SEC Rejects The Coinbase Petition For a Separate Crypto Regulation
Coinbase’s petition sought a new regulatory framework for digital assets. It asserted that the current application of securities statutes and regulations to crypto assets is unworkable. However, the SEC, and its Chairman Gary Gensler, disagreed. The latter asserted that existing laws and regulations are sufficient for the crypto securities markets.
Gensler emphasized the importance of maintaining the SEC’s discretion in setting its own rulemaking priorities and noted that the existing securities regime appropriately governs crypto asset securities.
I disagree with the [Coinbase] petition’s assertion that it is not feasible to identify an “issuer” of crypto asset securities. An issuer need not be a formal company issuing stock; it also includes a person or entity that organizes or sponsors the organization that is investing funds in an enterprise for profit.
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Gensler also asserted that federal courts have identified the issuers of crypto assets that were offered and sold as securities. According to the SEC Chair, these issuers have material information concerning the issuer and those securities that, absent disclosure, are not readily available to prospective and existing investors.
The SEC also highlighted ongoing efforts such as the Special Purpose Broker-Dealers Release, which provides a five-year period for broker-dealers to operate in certain circumstances without facing enforcement action for violating specific requirements related to crypto asset securities.
Armstrong Did Not Roll Over
After the SEC’s rejection of the Coinbase petition, the exchange challenged the SEC’s decision in the Third Circuit of the US Court of Appeals. This legal action underlines Coinbase’s frustration with what it sees as the SEC’s abdication of its duty to provide clear regulatory guidance for the crypto industry.
Armstrong described the SEC’s refusal to establish more transparent rules for crypto as a “nice small win” for the industry. He explained that this decision, although negative, allowed Coinbase to challenge the SEC’s response in court.
Armstrong questioned why the SEC was reluctant to clarify regulatory questions for the crypto industry, suggesting that the court’s involvement compelled the SEC to formally respond, which he views as a step forward in seeking regulatory clarity.
In defending Coinbase’s petition, Armstrong has criticized the SEC’s approach to crypto regulation. He described it as “unhelpful” for a new industry. He has pointed out the negative impacts of what he perceives as “regulation by enforcement” rather than through clear and transparent rules.
Armstrong has also acknowledged the existence of bad actors in the crypto space but emphasized that these should not be seen as representative of the entire industry.
Furthermore, Armstrong has highlighted Coinbase’s repeated efforts to work with the SEC and seek clarity on regulations. He mentioned that Coinbase had about 30 meetings with the SEC. During those meetings, the exchange team got, to his opinion, an “icy reception.”
The CEO expressed frustration with the SEC’s approach. He stated that there was no clear path for Coinbase to register in compliance with the SEC’s requirements. Armstrong also pointed out the conflicting views between the SEC and the Commodity Futures Trading Commission regarding the regulation of the crypto market, underscoring the regulatory uncertainty in the US.
