The Securities and Exchange Commission (SEC) has made it clear that it will not be granting Coinbase Global’s request for new rules governing the token markets and cryptocurrency exchanges. Coinbase had sent a 30-page “petition for rule making” to the agency in 2022, expressing the need for a clear and workable regulatory regime for digital assets. After receiving no response, Coinbase took the SEC to court in April to compel a reply to their request. However, the SEC has rejected the proposal, stating that the current rules applied to crypto are sufficient and dismissing Coinbase’s claim that they are unworkable.
SEC Chair Gary Gensler emphasized that investors and issuers in the crypto securities markets deserve the same protections as those in traditional securities markets. In a dissenting statement, SEC commissioners Hester Peirce and Mark Uyeda acknowledged the importance of addressing issues related to new technologies and innovations, highlighting their role as responsible regulators.
The rejection of Coinbase’s petition is not surprising, as Gensler has consistently advocated for trading platforms and crypto firms to register with the agency using existing rules. Most crypto firms argue that there is no clear pathway to registration, leading to ongoing regulatory challenges.
Coinbase is currently facing a lawsuit from the SEC, along with competitor Binance, accusing the companies of operating unregistered securities exchanges. The outcome of the lawsuit may have a significant impact on Coinbase’s business, and analysts suggest that a loss could severely restrict their ability to trade most tokens.
The oral arguments in the case against Coinbase are scheduled for January, offering investors insight into the potential implications of the SEC’s actions. Coinbase has not provided a comment on the SEC’s rejection at this time.