Late last month, Coinbase – who had previously been hit with a Wells notice, an informal warning from the SEC usually followed by a lawsuit – asked the courts to force the agency to clearly explain what actions they should take in order to remain compliant.
The SEC, on the other hand, remains tight-lipped.
Amicable Discussion Preferred
According to Brian Armstrong – the CEO of Coinbase – his firm intends to fight the current trend of regulation by enforcement and seeks to promote cooperation and amicable discussion regarding regulation.
“Spent the day in DC meeting with members of Congress. We need regulatory clarity in the US for the centralized players in crypto for many reasons – consumer protection, national security, economic growth, etc. The SEC has caused untold harm to America with its policy of regulation by enforcement. We will fight to fix that.”
The exec further said the company is ready to defend itself in court but would prefer not to and reiterated that he and his exchange are open to good faith talks with regulators.
Framework Already Established, Says Gensler
In spite of Coinbase’s willingness to negotiate, Gary Gensler, the head of the SEC, stated in court that existing regulation is already clear and that crypto exchanges simply refuse to take it into account, according to Bloomberg.
In return, Coinbase requested a clear rule-making guideline to abide by, submitted via a notice-and-comment process that would allow the newly clarified rules to be examined in public.
Unfortunately for the exchange, the SEC moved to block the request in court, stating that regulation may take years to set in stone.
“Coinbase’s preference for faster or different regulatory action by the commission does not entitle it to extraordinary relief from this court. The petition should be denied.”
Paul Grewal, Coinbase’s chief legal officer, took to Twitter to reiterate his firm’s stance that the SEC does not provide clarity to the companies it regulates.
Today the SEC responded to Coinbase’s petition for a writ of mandamus — asking the court to require the SEC to respond just yes or no to whether it will undertake rulemaking for our industry. The SEC’s answer? A resounding maybe. 1/7
— paulgrewal.eth (@iampaulgrewal) May 16, 2023
The securities regulator has stated that Gensler’s public comments are not to be taken as policy statements – despite acknowledging that they may continue to use enforcement actions in lieu of a regulatory framework until they’ve smoothed out the edges.
In the meantime, Coinbase has remained firm in its position, stating that they do not list securities. According to a spokesperson for the company, the exchange already takes SEC guidelines regarding securities into account when deciding which tokens to list, leading them to reject about 90% of applications.
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