SEC Denies Coinbase’s Call for New Crypto Regulation
The US Securities and Exchange Commission (SEC) has rejected Coinbase’s request for new regulations in the crypto industry. SEC Chair Gary Gensler stated that the existing rules are adequate and apply to the crypto securities markets. Gensler supported the Commission’s decision, emphasizing the need to maintain discretion in setting its own rulemaking priorities. He further highlighted that the federal securities laws are applicable to crypto assets offered and sold as investment contracts or when transactions are intermediated by entities. Gensler maintained that the Howey Test, which determines whether an investment contract constitutes a security, is sufficient for the industry.
Coinbase Seeks Regulatory Clarity
Coinbase, following the SEC’s crackdown on the crypto industry, demanded regulatory revisions and more clarity from the SEC. The exchange had filed a petition in July 2022, seeking answers to questions about securities and how the SEC determines an asset’s classification. However, the petition went unanswered for nine months, and in May, the SEC stated that it was not prepared to provide regulatory clarity. The SEC deemed new rules unnecessary, as the existing framework covers digital asset securities.
SEC’s Openness to Collaboration and Howey Test Application
In the recent statement, Gensler expressed the SEC’s willingness to work with compliant crypto projects and intermediaries. He reiterated that the Howey Test, which allows for flexibility in determining investment contracts, is sufficient for the industry. The SEC encourages entities to comply with the law and emphasized that the existing rules apply to the crypto securities markets.
Hot Take: SEC Affirms Existing Regulations for Crypto Securities
The SEC’s denial of Coinbase’s call for new crypto regulations underscores the agency’s stance on the existing framework. The SEC Chair, Gary Gensler, emphasized the adequacy of the current rules and maintained the importance of maintaining the Commission’s discretion in setting its rulemaking priorities. While Coinbase sought regulatory clarity, the SEC’s decision affirms that the Howey Test is the standard for determining whether an investment contract constitutes a security. The SEC remains open to collaborating with compliant crypto projects and intermediaries, signaling its desire to work within the existing regulatory framework.
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