SEC denies Coinbase’s petition for rulemaking

The US Securities and Exchange Commission denied Coinbase’s 2022 petition for rulemaking on Friday.

The SEC opposes the petition’s view that using existing securities laws to enforce crypto regulation is “unworkable.”

“The Commission has discretion to determine the timing and priorities of its regulatory agenda, including with respect to discretionary rulemaking such as that requested in the Petition,” the SEC wrote.

Gary Gensler, Chair of the Commission, said that he agrees with the Commission’s denial.

“I disagree with the petition’s assertion that now is the right time for the regulatory action it suggests. The Commission and its staff are currently pursuing numerous undertakings applicable to crypto asset securities and intermediaries, and the Commission’s assessment of whether and, if so, how to alter the existing regulatory regime may be informed by the results of these initiatives,” Gensler said in a statement. 

The current laws, he added, “appropriately governs crypto asset securities.”

In the end, the SEC said that Coinbase’s petition for rulemaking was “unwarranted,” which led to the denial.

Coinbase filed the request for rulemaking back in July 2022, claiming that “rules for securities just do not work for digital assets.”

“That hurdle is the fact that the securities rules simply do not work for digitally native instruments. They don’t work for tokenized debt. They don’t work for tokenized equity. They don’t work for crypto,” Coinbase’s chief policy officer Faryar Shirzad wrote in a blog post at the time.

The petition was filed a little less than a year before the SEC filed a lawsuit against the crypto exchange, alleging that it operated as an unregistered exchange while selling and offering unregistered securities. The two are still engaged in a legal battle. 

In April of this year, Coinbase sued the SEC to demand regulatory clarity on crypto. The SEC then denied answering Coinbase twice.  

Coinbase did not immediately return a request for comment.

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