Coinbase has escalated its demand for the US Securities and Exchange Commission (SEC) to engage in formal rulemaking for digital assets.
This plea emerges amidst a significant sale of Coinbase shares by Ark Invest, even as the crypto market experiences unprecedented highs.
Coinbase Challenges SEC as Ark Invest Cuts COIN Holding
Coinbase’s legal battle with the SEC reflects a growing tension within the cryptocurrency industry. The company’s court filing highlights the SEC’s drastic shift in stance towards digital assets.
Initially, the SEC exercised limited authority over the digital asset sector, allowing crypto companies to operate with minimal guidance. However, after the SEC Chair deemed most digital assets securities, the Commission embarked on a rigorous enforcement campaign.
Coinbase criticized this approach as a “power grab” that traps digital asset companies in a regulatory paradox, preventing effective securities law compliance. The firm argues that the SEC’s refusal to define its position through rulemaking denies companies the opportunity to comply with securities laws effectively.
“Even if the SEC believes it can lawfully assert new authority over digital assets today (it can’t), it must explain why in a rulemaking process and give the public a chance to understand and challenge that view. That hasn’t happened here, and yet it’s what the law requires. This type of disjointed regulation by enforcement approach to the crypto industry is harmful to American consumers and innovation alike,” Chief Legal Officer at Coinbase Paul Grewal said.
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Author: David Thomas
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