The chair of the United States Securities and Exchange Commission (SEC) Gary Gensler has responded to Coinbase’s petition for a clear stance on crypto regulation, asserting that sufficient laws are already in place. During a keynote speech at the Financial Markets Conference on May 15, Gensler stated that “the rules have already been published” and that “there’s nothing about a new technology that makes it non-consistent with the public policies that congress has laid out”. He went on to say that the SEC has rules in place for what is required to be an exchange, broker dealer or advisor, and how to register securities offerings.
Gensler believes that most crypto assets, apart from Bitcoin (BTC), are investment contracts and are therefore subject to securities regulations. He also stated that “financial intermediaries, nodes in the network, and they need to come into compliance if they’ve got securities on their platforms.”
Coinbase, along with many other U.S. crypto firms, have expressed their discontent with the SEC’s approach to crypto regulation, as well as its “regulation by enforcement” policy. This has led to the firm filing an action in federal court in April to compel the SEC to publicly disclose its stance on a petition from July 2022. The U.S. Chamber of Commerce has also expressed its disapproval of the SEC’s oversight in a May 9 amicus brief.
Coinbase’s chief legal officer Paul Grewal also sent a letter to the SEC requesting revisions to the agency’s proposed updates to its registered investment advisers custody rule. Coinbase argued that the proposals unfairly target crypto companies, lack nuanced rules for different asset classes, and make improper assumptions about custodial practices based on securities. Andreessen Horowitz (a16z) and the Blockchain Association have both echoed similar criticisms.
It remains to be seen how the SEC will respond to these complaints and whether or not Gary Gensler has the final say on crypto regulation.