The SEC Denies Coinbase Petition for Rulemaking on Crypto Securities
The United States Securities and Exchange Commission (SEC) has rejected a petition from Coinbase regarding the regulation of cryptocurrencies that are considered securities. Coinbase had submitted the petition in July 2022 and had been awaiting a response.
SEC Chair Gary Gensler’s Announcement
In a statement on December 15, SEC Chair Gary Gensler announced the commission’s decision to deny Coinbase’s petition. Gensler provided three reasons for the denial, stating that existing laws and regulations already cover the crypto market. He emphasized that investors and issuers in the crypto securities markets are equally deserving of protection under securities laws.
Gensler’s Response to Coinbase’s Arguments
Coinbase’s chief legal officer, Paul Grewal, had anticipated this argument and included a discussion on the Howey test and Reves decision in the petition. These are important aspects of modern securities law. However, Gensler only directly addressed this portion of the 32-page petition in his response.
Hot Take: SEC Rejects Coinbase’s Request for Crypto Securities Rules
The SEC has denied Coinbase’s request for rulemaking on transactions involving cryptocurrencies that are considered securities. In its decision, the SEC emphasized that existing laws and regulations already provide adequate coverage for the crypto market. This ruling indicates that investors and issuers in the crypto securities markets should be afforded the same protections as those in traditional securities markets. Coinbase’s arguments regarding key aspects of securities law were acknowledged by SEC Chair Gary Gensler but did not change the outcome of the petition.
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