Recently, Coinbase, which previously received a Wells notice from the SEC, an informal warning that typically precedes a lawsuit, requested that the court order the agency to clearly specify the actions required to maintain compliance.
Meanwhile, the SEC remains silent.
Preference for Amicable Discussion
Coinbase CEO Brian Armstrong aims to combat the present trend of regulation through enforcement and encourage collaboration and peaceful negotiations regarding regulation, according to him.
“I spent the day in DC meeting with members of Congress. There are several reasons why centralized crypto players require regulatory transparency in the United States, including consumer security, national security, and economic growth. Through its policy of rule-making by enforcement, the SEC has caused incalculable damage to America. We would work hard to correct that.”
The CEO expressed that the firm is willing to protect itself in court but would prefer to avoid it and reiterated that he and his exchange are willing to engage in good-faith discussions with regulators.
Gensler Says Framework Already Exists
Despite Coinbase’s willingness to negotiate, SEC head Gary Gensler stated in court that current regulations are already clear, and crypto exchanges merely refuse to adhere to them, according to Bloomberg.
As a result, Coinbase requested a clear instruction guideline for rule-making, submitted via a notice-and-comment process, which would allow newly clarified rules to be examined publicly. Unfortunately, the SEC moved to block the request in court, claiming that it may take years to establish regulations.
“The commission’s preference for quicker or different regulatory action does not entitle Coinbase to special court relief. This appeal should be rejected.”
Paul Grewal, Coinbase’s Chief Legal Officerreiterated the company’s position on Twitter, claiming that the SEC does not offer clarity to the firms 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 indicative of policy statements, while admitting that they may continue enforcements in lieu of a regulatory framework until the edges are smoothed out.
Meanwhile, Coinbase has remained steadfast in its position, stating that it does not list securities. As per a company spokesperson’s statement, the exchange already abides by SEC guidelines on securities while selecting which tokens to list, resulting in the rejection of roughly 90% of applications.