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.
Read more: Best Coinbase Alternatives in 2024 for Trading Crypto
Despite submitting a rulemaking petition almost two years ago, the SEC dismissed Coinbase’s efforts in a brief response, highlighting the agency’s reluctance to adapt its regulatory framework to accommodate the digital asset industry.
Parallel to this regulatory saga, Ark Invest recently divested $68.7 million of Coinbase (COIN) shares amidst a bull cryptocurrency market. This decision marks a shift in Ark Invest’s thesis, particularly as Bitcoin and Ethereum chart record highs. The sale highlighted Coinbase’s crypto importance and Ark Invest’s cautious approach amid crypto regulation uncertainties.
Ark Invest’s divestiture occurred amid technical challenges that caused Coinbase’s stock price to drop last week. Coinbase’s CEO Brian Armstrong’s acknowledgment of the platform’s underestimation of traffic surges reflects its operational hurdles.
Read more: Coinbase Review 2024: The Best Crypto Exchange for Beginners?
As the SEC continues its enforcement-led approach to crypto regulation, Coinbase’s push for rulemaking represents a pivotal point for the industry. The outcome of this legal challenge could set a precedent for how digital assets are regulated, influencing the market’s trajectory.
Trusted
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
