[NEWS] US SEC rejects Coinbase's petition for "clarification of cryptocurrency regulations"

On the 15th, the U.S. Securities and Exchange Commission (SEC) announced that it had rejected a petition submitted by cryptocurrency exchange Coinbase regarding cryptocurrency regulations.

In a statement, SEC Chairman Gary Gensler cited three reasons for rejecting the petition: "Existing laws and regulations already apply to the cryptocurrency market," "The SEC is responding to the cryptocurrency market in accordance with the laws and regulations," and "It is important to maintain the SEC's discretion in prioritizing regulatory enactment."

Coinbase submitted a petition to the SEC in July last year requesting clarification of cryptocurrency regulations. Since the SEC did not respond, the case escalated to a lawsuit in April this year.

In his statement, Chairman Gensler mentioned the "Howey test." The Howey test is a test that determines whether an investor expects to receive a return from a third party in a particular transaction in securities.

Chairman Gensler has often argued that the Howey test also applies to cryptocurrencies, and he maintained the same stance in this statement. He then stated, "To the extent that cryptoassets are offered or sold in the form of investment contracts and entities act as intermediaries in transactions of cryptoassets securities, federal securities laws apply."

Chairman Gensler also called for identifying cryptoassets issuers and for entities to obtain necessary licenses when intermediating transactions of cryptoassets that qualify as securities.

Criticism within the industry and the SEC

Following the announcement, Coinbase decided to appeal.

Paul Grewal, Coinbase's Chief Legal Officer, said on X (formerly Twitter), "We are appealing the SEC's arbitrary and capricious denial of our petition to regulate cryptoassets."

There are also voices of opposition to this decision within the SEC.

SEC Commissioners Hester Peirce and Mark Uyeda issued a statement acknowledging that the SEC has broad discretion, but argued that "we need to listen to the voices of various market participants through public discussion, publicizing our views, and inviting comments, and then sometimes provide guidance based on what we have learned."

Reference:Gensler's statement,Peirce and Uyeda's dissenting statement
Image: Shutterstock

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