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Coinbase is not taking the SEC’s allegations lightly. The exchange intends to dispute the regulator’s claims in every possible way.
In what may prove to be pivotal to the entire crypto industry, the US Securities and Exchange Commission (SEC) is squaring up against crypto exchange Coinbase. According to a recent Bloomberg report, the top regulator is alleging that Coinbase allows its US-based users to trade unregistered securities.
SEC Has a Go at the Coinbase Exchange
It all began last week during an insider trading case against a former top executive at Coinbase and his accomplices. While the FBI and other relevant authorities were at the driving seat of that investigation, the SEC also weighed in, albeit in an unsolicited manner. At the time, the SEC claimed that Coinbase has about nine cryptocurrencies listed on its platform, that are actually securities. But the exchange immediately debunked those claims, stating that they are baseless accusations. Paul Grewal, the company’s chief legal officer, said in a statement:
“Coinbase does not list securities. End of story.”
Notably, Coinbase believes that the SEC’s regulatory approach is bogus, to say the least. That is, there are no clear rules to identify what should or should not be classified as securities. And as CFTC Commissioner Caroline Pham claims, SEC operates “a striking example of ‘regulation by enforcement.”
Unclear Regulations: the Bane of Crypto Existence
For a long time, the lack of clarity in regulations has cast a shadow of uncertainty over the crypto business. For instance, regulators like SEC have failed to explicitly define what categorizes certain tokens as securities. In fact, blockchain firm Ripple still has an ongoing legal battle with the SEC over this classification of assets.
Without a doubt, however, the outcome of such a case as the Ripple vs SEC one will be a defining moment in the industry. Interestingly, once established that crypto tokens are not securities, then the SEC will lose its regulatory jurisdiction over exchanges like Coinbase and the rest. And ultimately, that means that the SEC would no longer regulate the listing and trading of tokens.
Meanwhile, it should be noted that Coinbase on its part, is not taking the SEC’s allegations lightly. From all indications, the exchange intends to dispute the claims in every possible way.