In the ongoing feud between the United States Securities and Exchange Commission (SEC) and Coinbase, both entities are leaving no chance in highlighting each other’s faults. Now, Coinbase’s executive has responded to the SEC’s recent step toward the exchange.
On Tuesday, responding to the SEC’s denial of Coinbase’s request to provide a new regulatory framework for the crypto industry, the exchange’s executive called out the regulator for being anti-crypto.
In a Twitter thread, Paul Grewal, Coinbase’s chief legal officer (CLO) said the SEC’s response to its legal action reinforces the exchange’s concerns about the financial regulator. He also pointed out that the regulator’s response was the first time the regulator formally explained its views about the regulatory clarity issue battling the crypto industry.
According to Grewal, the SEC’s response showed that the regulator would continue to use its regulation via enforcement as a substitute for rulemaking. He noted that the regulator told the court that the rulemaking process may take years, and they are in no rush. The Coinbase CLO added that it would issue a formal response to the SEC next week.
The Coinbase legal counsel further highlighted that the SEC said its Chair Gary Gensler’s public statement should not be misconstrued as “formal guidance or policy statements from the SEC.” Gensler has made several public statements about the crypto space, describing all digital assets except Bitcoin as securities and highlighting the noncompliance of crypto companies.
However, Gensler’s highly antagonistic approach towards crypto entities has also left its traces in SEC’s recent steps. Under Gensler’s leadership, the regulator has been on an enforcement spree and intends to continue doing so despite the resistance and criticism.
The Coinbase versus the SEC began in March when the regulator sent a Wells Notice to the firm hinting at a potential enforcement auction. Following that, the firm expressed disappointment and later retaliated with a narrow legal action to seek clarity.
In April, Coinbase filed a rulemaking petition against the SEC seeking an immediate determination to take a series of discretionary actions to replace existing applicable securities laws and regulations with a comprehensive new regulatory regime for the trading of crypto assets that are securities.
Following this, the US Court of Appeals for the Third Circuit responded to the complaint against the SEC regarding the need for clear rules for trading digital assets. However, none of this had any impact on the SEC and it continued to reiterate what Gensler has stated on several occasions. The regulator said that the existing regulations are sufficient the problem lies with the industry’s inability to comply with these.