The U.S. Securities and Exchange Commission (SEC) has rejected Coinbase Global’s formal petition seeking tailored regulations for the cryptocurrency sector. The denial, which arrived after Coinbase’s persistent efforts since 2022, has prompted the leading U.S. crypto exchange to declare its intention to challenge the decision in court.
The SEC, in a 3-2 vote, decided against proposing new rules for the digital asset sector, contesting Coinbase’s claim that current regulations are “unworkable” for the crypto sphere. The rejection is the latest episode in an ongoing struggle between the crypto sector and the top U.S. markets regulator. The SEC has consistently maintained its jurisdiction over most crypto tokens, considering them securities and subject to its oversight.
SEC Chair Gary Gensler expressed his support for the decision, stating, “Existing laws and regulations apply to the crypto securities markets.” However, Coinbase’s Chief Legal Officer, Paul Grewal, disagreed, arguing, “No one looking fairly at our industry thinks the law is clear or that there isn’t more work to do.”
Coinbase plans to contest the SEC’s denial in court, challenging what it perceives as an “abdication of duty” by the regulator. Grewal emphasized the need for collaboration to create laws and rules that benefit consumers and U.S. innovation.
The rejection follows Coinbase’s attempt in 2022 to press the SEC to establish specific rules for the crypto sector, citing inadequacies in existing U.S. securities laws. The SEC’s denial indicates its belief that the current securities regime adequately governs crypto asset securities.
Despite two SEC commissioners expressing dissent, the regulatory landscape for cryptocurrencies in the U.S. remains uncertain. The rejection comes amid ongoing efforts by crypto lobbyists to seek a comprehensive industry-specific regulatory framework in Washington. While the SEC pushes back against tailored rules on the securities side, the broader Financial Stability Oversight Council suggests in its annual report that congressional intervention is necessary for crypto regulations.
