By Paul Grewal, Chief Authorized Officer
Tl;dr: Coinbase doesn’t listing securities on its platform. Interval.
We now have stated it earlier than, however given right now’s occasions, it bears repeating.
Earlier right now, following a Department of Justice (DOJ) investigation right into a former Coinbase worker’s misuse of confidential Coinbase info associated to itemizing selections, the Securities and Alternate Fee (SEC) individually filed securities fraud prices in opposition to this particular person associated to this wrongdoing. The SEC alleges that 9 digital property concerned are securities. The DOJ reviewed the identical details and selected to not file securities fraud prices in opposition to these concerned. As CFTC Commissioner Caroline Pham acknowledged, that is “a hanging instance of ‘regulation by enforcement’” by the SEC.
We agree with Commissioner Pham and, respectfully, 100% disagree with the SEC’s resolution to file these securities fraud prices and the substance of the fees themselves. Let me clarify why.
Seven of the 9 property included within the SEC’s prices are listed on Coinbase’s platform. None of those property are securities. Coinbase has a rigorous course of to investigate and assessment every digital asset earlier than making it obtainable on our change — a course of that the SEC itself has reviewed. This course of contains an evaluation of whether or not the asset might be thought-about to be a security, and in addition considers regulatory compliance and information security facets of the asset. To be express, the vast majority of property that we assessment 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 an alternative of getting a dialogue with us concerning the seven property on our platform, the SEC jumped on to litigation. The SEC’s prices put a highlight on an essential downside: the US doesn’t have a transparent or workable regulatory framework for digital asset securities. And as an alternative of crafting tailor-made guidelines in an inclusive and clear manner, the SEC is counting on all these one-off enforcement actions to attempt to carry all digital property into its jurisdiction, even these property which might be not securities.
Simply this morning (and with no prior data 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 prices counsel the SEC has little curiosity on this most basic 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 assessment course of retains securities off Coinbase’s platform. We stay wanting to share our perspective with the SEC, particularly by a proper rule-making course of desperately wanted.