By Paul Grewal, Chief Authorized Officer
Tl;dr: Coinbase doesn’t listing securities on its platform. Interval.
We’ve stated it earlier than, however given as we speak’s occasions, it bears repeating.
Earlier as we speak, following a Division of Justice (DOJ) investigation right into a former Coinbase worker’s misuse of confidential Coinbase info associated to itemizing selections, the Securities and Trade Fee (SEC) individually filed securities fraud prices towards this particular person associated to this wrongdoing. The SEC alleges that 9 digital belongings concerned are securities. The DOJ reviewed the identical info and selected to not file securities fraud prices towards these concerned. As CFTC Commissioner Caroline Pham said, that is “a hanging instance of ‘regulation by enforcement’” by the SEC.
We agree with Commissioner Pham and, respectfully, 100% disagree with the SEC’s resolution to file these securities fraud prices and the substance of the fees themselves. Let me clarify why.
Seven of the 9 belongings included within the SEC’s prices are listed on Coinbase’s platform. None of those belongings are securities. Coinbase has a rigorous course of to investigate and evaluation every digital asset earlier than making it accessible on our trade — a course of that the SEC itself has reviewed. This course of contains an evaluation of whether or not the asset might be thought of to be a safety, and in addition considers regulatory compliance and info safety points of the asset. To be specific, nearly all of belongings that we evaluation should not finally listed on Coinbase.
We cooperated with the SEC’s investigation into the wrongdoing charged by the DOJ as we speak. However as an alternative of getting a dialogue with us concerning the seven belongings on our platform, the SEC jumped on to litigation. The SEC’s prices put a highlight on an vital drawback: the US doesn’t have a transparent or workable regulatory framework for digital asset securities. And as an alternative of crafting tailor-made guidelines in an inclusive and clear means, the SEC is counting on a majority of these one-off enforcement actions to attempt to deliver all digital belongings into its jurisdiction, even these belongings which can be not securities.
Simply this morning (and with no prior data of the timing of the fees mentioned), Coinbase filed a petition for rule making with the SEC calling for precise rule making so the crypto securities market has an opportunity to develop. We fear that as we speak’s prices counsel the SEC has little curiosity on this most basic position of regulators.
However within the absence of a concrete digital asset securities regulatory framework from the SEC, we stay assured that Coinbase’s rigorous evaluation course of retains securities off Coinbase’s platform. We stay desperate to share our perspective with the SEC, particularly by a proper rule-making course of desperately wanted.
