SEC Rejects Coinbase’s Rulemaking Petition, Insists Current Laws Are Applicable
By Benzinga
U.S. regulators rejected a rulemaking petition submitted by Coinbase Global Inc. (NASDAQ:COIN).
What Happened: Last year, Coinbase drafted a “petition for rule making."
The company sent the 30-page document to the U.S. Securities and Exchange Commission (SEC), claiming that the U.S. lacked “a clear and workable regulatory regime” for digital assets.
The SEC didn't pay the petition much mind until, earlier this year, Coinbase attempted to get a judge to force the agency to reply.
Today, the SEC replied, rejecting the petition. SEC chair Gary Gensler, expressed his support for the decision, underlining three primary reasons:
- Current securities laws are fully applicable to crypto securities markets. There is no reason, he says, to believe that the protections offered by these laws are any less relevant for investors and issuers in the crypto space.
- The SEC takes a proactive approach in addressing the crypto securities markets through rulemaking. This includes various ongoing initiatives and proposed rules that are particularly pertinent to crypto asset securities and intermediaries. The Special Purpose Broker-Dealers Release provides specific operational conditions for broker-dealers in crypto asset securities.
- The decision reflects the SEC's priority to maintain discretion in setting its rulemaking agenda. The Commission allocates its resources, entrusted by Congress, to address different sectors of the capital markets, including the crypto market.
Why It Matters: Cryptocurrency rules and regulations are murky in the U.S. But the SEC says the broad definition of security, as stipulated in the Acts of 1933 and 1934, applies. The so-called "Howey" test incorporates a variety of instruments like investment contracts (as established by the Howey and Reves Supreme Court decisions).
Gensler often reiterates this, stressing that registration and compliance, while demanding, are essential to ensure full and fair disclosure for investors.
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