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The US Securities and Exchange Commission (SEC) again denied Coinbase’s repeated call for new crypto regulation.
In a statement, SEC Chair Gary Gensler said the securities agency denied Coinbase’s petition for new digital asset regulation. According to the SEC, the existing rules are in place and are sufficient.
Rules Already in Place According to SEC
The SEC denied crypto exchange Coinbase’s repeated call for an updated crypto regulatory framework. In a December 15 statement, Chairman Gary Gensler said he supported the decision, arguing that an existing framework is in place. According to Gensler:
“I was pleased to support the Commission’s decision for three reasons. First, existing laws and regulations apply to the crypto securities markets. Second, the SEC addresses the crypto securities markets through rulemaking as well. Third, it is important to maintain Commission discretion in setting its own rulemaking priorities.”
“Thus, to the extent that crypto assets are offered and sold in the form of an investment contract, and to the extent that entities intermediate transactions in crypto asset securities, the federal securities laws apply.”
Coinbase Demands Regulatory Clarity
The SEC started 2023 off with an absolute persecution of the crypto industry. Following the agency’s crackdown, crypto exchange Coinbase demanded the SEC revise its crypto regulation and provide the industry with more clarity. Coinbase filed a narrow application in April compelling the SEC to give a “yes or no” answer to a petition filed in July 2022. In its 2022 petition, Coinbase put forward a series of questions seeking clarity on the nature of securities and how the SEC determines whether an asset is a security. The exchange’s petition went unanswered for nine months. In May, the agency said it refused to entertain Coinbase’s demands and said it was not prepared to provide clarity on current crypto regulations. At the time, the SEC said new rules were unnecessary as it deems digital asset securities. The SEC said:
“The rulemaking petition as to which Coinbase seeks an immediate determination asks the Commission 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.”
In the December 15 statement, Gensler said the agency is open to work with crypto projects and intermediaries “that wish to comply with the law.” Gensler further maintained the SEC’s standard for determining whether an investment contract constitutes a security relies on the Howey Test. The agency’s head affirmed the Howey test is sufficient to apply to the industry.
“The Howey Court said that the definition of an investment contract ‘embodies a flexible, rather than a static, principle, one that is capable of adaptation to meet the countless and variable schemes devised by those who seek the use of the money of others on the promise of profits,” Gensler explained.
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