Coinbase lead counsel Paul Grewal confirmed the crypto exchange’s preparedness to battle the SEC suit while running business uninterrupted by the court process. He clarified the Coinbase position while addressing the discussion draft in a hearing at DC on Digital Asset Market Structure.
Coinbase Urges Congress to Salvage US Crypto Space
Grewal urged Congress to expedite the adoption of a draft bill that would lay a clear regulatory framework on digital assets transactions. His pronouncement coincides with when the US Securities and Exchange Commission filed a lawsuit alleging Coinbase failed to register for securities exchange, brokerage and clearance services.
Grewal strayed from the prepared remarks concerning the lawsuit to consider SEC’s decision disappointing though expected. He decried the security watchdog’s reliance on enforcement actions. He supported the proposed bill provisions necessary for a clearer crypto industry framework.
Grewal restated that the solution for the US digital assets industry lies in the legislation allowing the development of fair rules that regulatory agencies should apply equally rather than pursue litigation. He stated that despite the complaint lodged by SEC, the San Francisco-based firm would retain usual business operations.
Coinbase’s Grewal Supports Republican-Led Proposal
The SEC’s enforcement action comes just before the scheduled hearing by the House Agriculture Committee on the Republican-led bill dubbed the Digital Asset Market Structure Discussion Draft. Grewal indicated that the bill portrays a strong milestone in accomplishing regulatory clarity, and he urges Congress to expedite its adoption.
Grewal admitted that while there are several details to resolve, the bill proposed by the Grand Old Party (GOP) is a critical step in developing a regulatory regime oriented to nurturing innovation, US industry presence and safeguarding consumers.
Grewal testimony before Congress coincides with the advertisement released by Coinbase to criticize SEC for its failure to offer guidance on how crypto firms could operate legally. The advertisement reiterates the previous pronouncements by Coinbase that SEC was privy to the business the crypto exchange was operating before going public in 2021.
The proposal presents a solid groundwork for regulating digital assets as security and commodity. The proposal offers a distinction of lanes to the extent that SEC can exercise authority over the digital asset. Grewal acknowledges that the GOP-led bill is defining the extent that the network qualifies as decentralized, resolving the battle pitting the Securities and Exchange Commission (SEC) against the Commodity Futures Trade Commission (CFTC).
SEC Rattles Digital Assets Industry With High Profile Suits
Grewal testimony before the committee aligns with the criticism of the SEC’s enforcement blitz rattling the crypto sector by charging Binance and Coinbase. SEC’s filing before the court when suing Binance on Monday, June 5, alleging it violated securities laws. The Garry Gensler-led agency submits that Binance failed to register its exchange services while offering unregistered crypto transactions. Binance, on its end, disputed the charges terming SEC’s actions overreach.
SEC lodged a case of high profile nature against Coinbase, accusing the Brian Armstrong-led company of commingling functions, including brokerage, clearance and exchange services. Additionally, the commission alleges Coinbase offered for sale unregistered securities – Polygon, Cardano and Solana – via the staking service.
The emergence of the SEC lawsuit sent shockwaves, with the Coinbase stock plunging 21% to exchange hands at $45.98 though later recovered to exchange at $51.17.
Revisiting SEC Versus Coinbase Legal Battle
The lawsuit lodged by the agency adds to Coinbase’s struggle with the watchdog. SEC had in March this year served Coinbase with the Wells Notice being the prelude of the suit filed on Tuesday, June 6. The firm’s chief executive sharply rebuked the SEC’s lawsuit as unfair and unreasonable to regulate digital assets. He promised that Coinbase would engage in an open forum to unearth the biased approach deployed by the SEC.
Coinbase responded to the SEC with a petition before the federal court to compel SEC to issue clear digital regulations. Grewal lamented the ignorance demonstrated by SEC to the rulemaking petition. SEC has restated that its enforcement actions are within the provisions of the existing securities laws.
The enforcement director at SEC, Gurbir Grewal, dismissed Coinbase’s petition terming it as calculated decisions that deprive investors of the safeguards guaranteed through registration. SEC’s Grewal challenged Coinbase’s move, accusing it of ignoring the rules and preferring different ones. Neglecting the rules results in adverse outcomes for the investing public.
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