By Paul Grewal, Chief Authorized Officer
Tl;dr: Coinbase doesn’t listing securities on its platform. Interval.
We’ve got mentioned it earlier than, however given right now’s occasions, it bears repeating.
Earlier right now, following a Division of Justice (DOJ) investigation right into a former Coinbase worker’s misuse of confidential Coinbase data associated to itemizing selections, the Securities and Alternate Fee (SEC) individually filed securities fraud costs towards this particular person associated to this wrongdoing. The SEC alleges that 9 digital belongings concerned are securities. The DOJ reviewed the identical information and selected to not file securities fraud costs towards these concerned. As CFTC Commissioner Caroline Pham acknowledged, that is “a placing instance of ‘regulation by enforcement’” by the SEC.
We agree with Commissioner Pham and, respectfully, 100% disagree with the SEC’s choice to file these securities fraud costs and the substance of the fees themselves. Let me clarify why.
Seven of the 9 belongings included within the SEC’s costs are listed on Coinbase’s platform. None of those belongings are securities. Coinbase has a rigorous course of to investigate and evaluate every digital asset earlier than making it accessible on our alternate — a course of that the SEC itself has reviewed. This course of consists of an evaluation of whether or not the asset could possibly be thought-about to be a safety, and in addition considers regulatory compliance and data safety elements of the asset. To be express, nearly all of belongings that we evaluate are usually not in the end listed on Coinbase.
We cooperated with the SEC’s investigation into the wrongdoing charged by the DOJ right now. However as a substitute of getting a dialogue with us concerning the seven belongings on our platform, the SEC jumped on to litigation. The SEC’s costs put a highlight on an necessary downside: the US doesn’t have a transparent or workable regulatory framework for digital asset securities. And as a substitute of crafting tailor-made guidelines in an inclusive and clear means, the SEC is counting on most of these one-off enforcement actions to attempt to carry all digital belongings into its jurisdiction, even these belongings which might be not securities.
Simply this morning (and with no prior information 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 right now’s costs recommend the SEC has little curiosity on this most elementary 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 evaluate course of retains securities off Coinbase’s platform. We stay desperate to share our perspective with the SEC, particularly by way of a proper rule-making course of desperately wanted.