In a recent event, the two arch enemies i.e. the United States Securities and Exchange Commission (SEC) and Coinbase shared the stage. Amid the discussions, both the entities were able to establish very little common ground.
Days after SEC’s enforcement action against Coinbase, Faryar Shirzad, the exchange’s chief policy officer and Gurbir Grewal, SEC’s director of the division of enforcement, appeared on the same stage while attending an event. The two individuals delivered back-to-back remarks on the state of crypto regulation in the US. Notably, the two did not have much common grounds on the topic.
Additionally, Paul Grewal, Coinbase chief legal officer (CLO), was also present at the event and expressed his opinion before Shirzad. The individuals were attending a policy event in New York hosted by Lowenstein Sandler LLP and Rutgers law school. Grewal said that the regulator is not haphazard about selecting companies to bring enforcement actions against and the Coinbase lawsuit was a “judgment call.” He added:
When we are evaluating which cases to bring…we need to think about where we can address investor harm. We have to be thoughtful about bringing the cases that will have the most impact.
Further, Grewal stated that crypto firms and token issuers know the laws and know how to act compliantly and if companies fail to comply that’s intentional. The same sentiments as highlighted by Gensler but the fact that Grewal states that industry is compliant except a select few.
Shirzad, who took the stage minutes after Grewal, questioned how the federal government is approaching the crypto industry altogether and the apparent disconnect between lawmakers and regulators. He added:
It’s not typical that you’ll see congressional action moving in earnest, and not just a government department, but a regulatory agency, rush in to redefine facts on the ground to get ahead of that. I don’t know if that’s happening here … but if that were happening, it would be unusual.
On being asked about Coinbase’s decision to file a rulemaking petition against the SEC, which the exchange did prior to being sued by the agency, Shirzad said it was the exchange’s responsibility. He said that exchange’s “success is ultimately critical to the development of the crypto economy.”
To this, SEC’s director of enforcement also presented his stance and said that crypto entities are trying to defend the regulator. He targeted the attacks on regulation via enforcement approach and said:
I brush back on this ‘regulation by enforcement’ notion. It’s just a catchy, tired refrain.
For long before the current lawsuit, Coinbase has argued Gensler’s agency is actively working against financial and technological innovation. They have accused the SEC for being anti-crypto and taking steps which are harmful for the industry.
Coinbase much like the larger industry have often highlighted the urgency of crypto regulations. However, at the same event, Dorothy DeWitt, federal policy expert, warned crypto companies that even if policy advances, rules can take a decade or more to pass.
Nonetheless, the SEC’s lawsuit against Coinbase is in its early stages, so next steps are not yet clear. As of Tuesday, Coinbase has not delisted any of the tokens the SEC named as securities in the suit and has not made any public comments about a potential settlement. As the case progresses there would be more clarity over the stances and the exchange’s stance.