SEC Denies Coinbase Push for Crypto Regulation, Cites Own Priorities
The Securities and Exchange Commission (SEC) rejected a petition by cryptocurrency exchange Coinbase on Friday requesting the creation of tailored regulations for digital assets.
In a two-page response, the SEC said that after careful consideration, the requested rulemaking was currently unwarranted and the petition by Coinbase was denied. SEC Chair Gary Gensler noted in a statement that the securities regulator already has sufficient authority under current statutes to govern crypto asset securities and police wrongdoing in the nascent industry.
This denial is a setback for Coinbase, which had formally petitioned the SEC in 2022 to develop specialized crypto regulations, distinct from conventional securities regulations. The exchange argued that shoehorning digital assets into traditional securities law would stifle innovation in the crypto sector. Coinbase then took the SEC to court to compel a response to its rulemaking petition.
The SEC disagreed with the notion that established securities laws are unworkable for crypto asset securities, however. The regulator said it has already been proposing rules to directly regulate crypto market participants, and its enforcement arm has addressed violations effectively thus far.
According to Gensler, preserving the SEC’s discretion in setting its rulemaking priorities based on broad public interest is also an important consideration. He pointed out that a crypto broker-dealer, Prometheum, has successfully registered with the regulator by following existing laws.
The SEC’s decisive refusal to accommodate the crypto industry’s regulatory demands underscores an increasingly adversarial relationship between the watchdog and players like Coinbase. Earlier this year, the agency sued
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