SEC rejects Coinbase’s request for regulations on cryptocurrencies.
Chairman Gary Gensler reiterated his position that no additional regulation is required to oversee the cryptocurrency market when the SEC on December 15 rejected Coinbase Global’s request for the agency to issue rules governing digital assets.”
Crypto asset securities are suitably governed by the current securities laws, according to a statement released by Gensler on December 15. “I agree with the commission’s decision to deny the petition.”
With a Petition for Rulemaking submitted in July 2022, Coinbase asked the SEC to “propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods, including potential rules to identify which digital assets are securities.
“ In order to force the SEC to respond, Coinbase then filed a lawsuit against the organisation in late April.
Gensler said in a statement released on December 15 that the SEC is rejecting Coinbase’s petition because the commission must exercise discretion in determining which rules to make first and because there are already laws and regulations pertaining to the cryptocurrency market
The SEC is also working on a number of rules pertaining to digital assets. Gensler cited the SEC’s Howey Test, as he has previously done, to
sorting through transactions to see which ones are “investment contracts,” in order to recognise digital securities. Additionally, he cited the ruling in Reves v.
Rules and Regulations: SEC Rejects Coinbase’s Request on December 15.
Ernst & Young, a case heard by the Supreme Court, which determined that “Congress’s purpose in enacting the securities laws was to regulate investments, in whatever form they are made and by whatever name they are called,” as stated by Gensler.
“Thus, to the extent that crypto assets are offered and sold in the form of an investment contract, and to the extent that entities intermediate transactions in crypto asset securities, the federal securities laws apply,” said Gensler.
But those in the digital asset sector and a number of lawmakers on Capitol Hill have repeatedly requested more clarity, stating that it is not a simple task to determine how current laws apply to the sector.
The United States does not have “a functioning market in digital asset securities due to the lack of a clear and workable regulatory regime,” according to Coinbase’s petition.
Hester M. Peirce and Mark T. Uyeda, two Republican commissioners, disapproved of the SEC’s ruling in a statement they issued on December 15. “In our view, the petition raises issues presented by new technologies and other innovations, and addressing these important issues is a core part of being a responsible regulator,” the commissioners stated.
They added that public input should be considered when examining such matters.
through channels such as calls for comments, public roundtables, and concept releases.
Conversely, Gensler restated his belief that fraud and noncompliance are rampant in the cryptocurrency industry. “While the crypto market experiences outsize fraud, abuse and noncompliance relative to its size, it nevertheless is a small portion of the bigger-than-$110 trillion capital markets,” Gensler stated in the statement.
“It is important that the commission maintain discretion to direct focus to whichever parts of the capital markets need updated regulation.”
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