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- SEC Chair Gary Gensler has responded to Coinbase’s petition for clear crypto regulation, stating that the rules already exist.
- Gensler argues that the crypto sector has been largely non-compliant with existing regulations.
SEC Chair Asserts Adequate Rules for Crypto Already Exist
During a keynote speech at the Financial Markets Conference, SEC Chair Gary Gensler addressed Coinbase’s petition for clear crypto regulation. Gensler asserted that the rules for the crypto industry have already been published and that the sector has been operating largely non-compliant.
Gensler Highlights SEC’s View on Crypto Assets
Gensler’s current view is that most crypto assets, excluding Bitcoin, fall under the securities definition of an investment contract. He emphasized that if the public invests money with the expectation of profit based on the efforts of others in a common enterprise, it qualifies as a security. Gensler urged financial intermediaries and nodes in the network to come into compliance if they have securities on their platforms.
During the Financial Markets Conference, Gensler responded to Coinbase’s request for clear crypto regulations by stating that the rules have already been published. He emphasized that the crypto industry has been operating largely non-compliant with the existing regulations set forth by Congress. Gensler pointed out that the SEC has already provided rules regarding custody of assets, operating as an exchange, being a broker-dealer or advisor, and registering securities offerings.
Coinbase and other US-based crypto firms have been vocal about the lack of clear regulation in the industry and the SEC’s approach of “regulation by enforcement.” In April, Coinbase filed a federal court action urging the SEC to disclose its stance on a petition from July 2022 that called for clear rules for the crypto sector. The US Chamber of Commerce has supported Coinbase’s call for clarity and criticized the SEC’s enforcement-based approach to oversight.
Additionally, Coinbase’s Chief Legal Officer Paul Grewal 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 incorrect assumptions about custodial practices based on securities. Similar criticisms of the proposals have been echoed by other players in the space, including Web3 venture capital fund Andreessen Horowitz (a16z) and the Blockchain Association.