The Securities Exchange Commission (SEC) has rejected calls for an overhaul of US regulatory rules around cryptocurrency as ‘unwarranted’.
A petition arguing for ‘a new regulatory framework’ on cryptocurrency was filed with the SEC in July 2022 by Coinbase, the largest cryptocurrency exchange operator in the US by trading volume.
Specifically, Coinbase’s petition sought to address the classification of cryptocurrencies as securities, registration and disclosure requirements for offers and sale of crypto asset securities, and intermediation of security transactions.
After assessing the petition, the SEC opted to reject it on the basis that the ‘requested rulemaking is currently unwarranted’, in particular disagreeing with the argument that current statutes and regulations are ‘unworkable’.
Additionally, the SEC noted that it is currently engaged in ‘many undertakings’ that relate to regulatory priorities extending well beyond crypto asset securities’, and so the timing of the petition and its calls for reform may not align with the Commission’s current regulatory agenda.
“The requested regulatory action would significantly constrain the Commission’s choices
regarding competing priorities, and the Commission declines to undertake it at this time,” the SEC explained.
Coinbase and the SEC have been at loggerheads before, with the regulator having gone as far to file a motion to sue the cryptocurrency exchange earlier this year.
The SEC had argued that Coinbase “operated as an unregistered broker, including soliciting potential investors, handling customer funds and assets, and charging transaction-based fees”.
In response, the company would argue that its activity does fall within the SEC’s regulatory scope, citing the fact that it does not circulate investment contracts and that crypto asset trading is not tied to such contracts.
Difference of opinion between the two has seen Coinbase file its own lawsuit against the SEC, back in April 2022, claiming that the regulator needed to provide more clarity on crypto rules and regulations.
One month after issuing its response to the SEC’s own legal action, Coinbase would file its petition calling for review of the Commission’s rulemaking on cryptocurrency and crypto asset trading.