SEC Rejects Coinbase's Request for Clear Cryptocurrency Regulations

SEC Rejects Coinbase’s Request for Transparent Crypto Rules

The U.S. Securities and Exchange Commission (SEC) has denied Coinbase’s request for transparent crypto rules, according to a recent release. Coinbase had filed a narrow action in federal court, seeking a yes or no response from the SEC regarding its July 2022 petition for formal rulemaking.

Regulating investments by any name

Chairman Gary Gensler announced the SEC’s denial of Coinbase’s Rulemaking Petition, citing three reasons. First, existing laws already apply to crypto securities markets. Second, the SEC addresses these markets through rulemaking. Third, it is necessary to preserve Commission discretion in establishing rulemaking priorities.

The statement emphasizes the principles outlined in Howey and Reves, which prioritize economic substance over labels or forms when analyzing diverse investment types.

Gensler wants to work with crypto

Gensler asserts that he stands on the side of compliance and welcomes meaningful engagement with the SEC. He looks forward to working with crypto projects and intermediaries that wish to comply with the law.

Commissioners Hester Peirce and Mark Uyeda expressed disappointment at the Commission’s decision but stated their willingness to listen to conversations and emerging ideas.

Hot Take: SEC Denies Coinbase’s Request for Transparent Crypto Rules

The U.S. Securities and Exchange Commission (SEC) has rejected Coinbase’s petition for transparent rules regarding cryptocurrencies. The denial was based on existing laws that already apply to crypto securities markets, the SEC’s approach of addressing these markets through rulemaking, and the need to preserve the Commission’s discretion in setting rulemaking priorities. Chairman Gary Gensler emphasized the importance of economic substance when evaluating different investment types and expressed his willingness to work with compliant crypto projects and intermediaries. While some commissioners expressed disappointment with the decision, they remain open to discussions and new ideas.