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U.S. SEC Denies Coinbase's Push for Crypto Regulations as 'Unwarranted'

U.S. SEC Denies Coinbase's Push for Crypto Regulations as 'Unwarranted'

CoindeskCoindesk2023/12/15 08:23
By:Jesse Hamilton

The U.S. exchange had formally petitioned the agency to start writing comprehensive crypto rules, but after "careful" consideration, the SEC said no.

U.S. Securities and Exchange Commission Chair Gary Gensler (Jesse Hamilton/CoinDesk)

U.S. crypto exchange Coinbase's petition to the Securities and Exchange Commission (SEC) to prod it toward a system of tailored rules for digital assets was rejected by the regulator on Friday.

"The existing securities regime appropriately governs crypto asset securities," said Chair Gary Gensler, in a statement issued with the denial. Besides arguing that the SEC has sufficient authority in today's laws, he said the industry watchdog has already been engaging in rule proposals to directly regulate crypto businesses, and its enforcement division has also been able to address wrongdoing.

Gensler made a third argument, too, that "it is important to maintain commission discretion in setting its own rulemaking priorities."

Coinbase had applied this formal pressure in 2022, before it was itself sued by the SEC as an unregistered securities exchange. Earlier this year, the company had asked a federal court to force a response from the agency, which has now arrived.

"The commission disagrees with the petition’s assertion that application of existing securities statutes and regulations to crypto asset securities, issuers of those securities, and intermediaries in the trading, settlement, and custody of those securities is unworkable," the five-member commission concluded in its two-page response, which said the agency had given the request careful consideration. "The commission concludes that the requested rulemaking is currently unwarranted and denies the petition."

Commissioners Hester Peirce and Mark Uyeda opposed the SEC's denial.

"We hope that interested persons continue to posit specific rule changes, guidance, and exemptions that would form a useful basis for the crypto industry to continue its development within the United States," the Republican commissioners argued in a statement. "While we are disappointed that the commission is not hosting these important conversations, we will have an open ear for conversations that others host and the ideas that emerge from those conversations."

Gensler had also noted – without naming Prometheum Inc. – that a crypto broker has used a special digital assets registration, suggesting this method of compliance is "workable."

Seeking a wider, industry-specific system of regulations in the U.S. has been the leading priority of crypto lobbyists in Washington. So far, legislative efforts this year in Congress have made progress but failed to reach the finish line. While the SEC pushes back on the need for tailored rules on the securities side, the wider Financial Stability Oversight Council that includes the agency's chairman as a member concluded in its annual report yesterday that crypto does need Congress to intervene with regulations.

Read More: SEC Says It May Make a Recommendation on Coinbase Petition Within 4 Months

UPDATE (December 15, 2023, 16:23 UTC): Adds opposition from two SEC commissioners.

Edited by Nikhilesh De.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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