In a recent development, the Securities and Exchange Commission (SEC) of the United States has rejected the formal petition submitted by Coinbase, a prominent U.S. crypto exchange, urging the regulatory body to establish customised regulations for the cryptocurrency sector. Coinbase had been awaiting a response since 2022 and had even resorted to legal action to prompt a reply. The SEC, after thorough consideration, declined the request, asserting that there is no need for a new regulatory framework for cryptocurrencies.
SEC Chair Gary Gensler stated that the existing securities regime adequately governs crypto asset securities. He emphasized that the SEC already possesses ample authority within current laws and is actively proposing targeted regulations for crypto businesses. Gensler also argued in favour of maintaining the Commission’s discretion in setting its own rule making priorities.
The formal pressure from Coinbase in 2022 preceded legal action against the exchange by the SEC, accusing it of operating as an unregistered securities exchange. Earlier this year, Coinbase sought a court-mandated response from the SEC, which has now been officially denied.
In a two-page response, the five-member commission, with Commissioners Hester Peirce and Mark Uyeda in opposition, concluded that the requested rulemaking for tailored regulations in the crypto industry is currently unwarranted. Despite the disagreement, the commission expressed openness to constructive conversations and suggestions for rule changes and exemptions that could contribute to the development of the crypto industry within the United States.
Gensler highlighted an example of a crypto broker, presumed to be Prometheum Inc., using a special digital assets registration, suggesting that this compliance approach is feasible. Advocates for the cryptocurrency industry in Washington have been actively pushing for a comprehensive, industry-specific regulatory framework. While legislative efforts in Congress have shown progress, they have not reached fruition.
It is noteworthy that, while the SEC opposes tailored rules on the securities side, the Financial Stability Oversight Council, which includes the SEC chairman, indicated in its recent annual report that congressional intervention with regulations is necessary for the cryptocurrency sector.
