SEC Chairman Gensler claps back at Coinbase, says crypto regulations already exist

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has hit back at Coinbase’s petition forcing the agency to take a clear stance on crypto regulation, arguing that adequate laws are already in place.

In a May 15 keynote speech at the Financial Markets Conference, Gensler was asked about the dispute with Coinbase, the cryptocurrency rules, and why “the SEC doesn’t publish rules for that market.”

In response, Gensler adamantly claimed that “the rules have already been published”, adding that:

“To put it very directly, this is a field that has been largely non-compliant. […] There is nothing about a new technology that makes it inconsistent with the public policy that Congress has laid out.”

Gensler argued that the SEC has already set the rules for what it takes to hold assets, be an exchange, broker-dealer or advisor, and how to register securities offerings with the bureau.

The SEC Chairman’s current view is that most crypto assets – except Bitcoin (BTC) – fall under the securities definition of an investment contract.

“If the public invests money and expects profit based on the efforts of others, in a joint venture, it is a certainty,” he said, adding:

“There are financial intermediaries, nodes in the network, and they have to comply if they have securities on their platforms.”

Coinbase – and many other US crypto companies – have repeatedly spoken out against an apparent lack of clear crypto regulation and the SEC’s so-called “regulation by enforcement” approach to crypto, along with its hostile nature in dealing with digital asset companies.

I’m joining this afternoon @AtlantaFed‘s 2023 Financial Markets Conference.

My comments will be streamed live at 12:45pm: https://t.co/T01c8zAD8c#FedFMC

— Gary Gensler (@GaryGensler) May 15, 2023

In April, the company went so far as to file a lawsuit in federal court to force the SEC to publicly disclose its position on a July 2022 petition calling for clear rules for the crypto sector.

Notably, the U.S. Chamber of Commerce has also reiterated this call from Coinbase as it heavily criticized the SEC’s oversight via a May 9 amicus brief.

“The SEC has deliberately muddied the waters by claiming overwhelming authority over digital assets while taking a haphazard, enforcement-based approach,” it stated.

Related SEC Under Fire Over Its Custody Rule: Law Decoded, May 8-15

On May 8, Coinbase’s Chief Legal Officer, Paul Grewal, also sent a letter to the SEC requesting a review of the agency’s proposed retention rule updates for Registered Investment Advisors.

Essentially, Coinbase argued that the proposals unfairly target crypto companies, lack nuanced rules across asset classes, and make inappropriate assumptions about securities-based custody practices.

Other players in the space, such as Web3 venture capital fund Andreessen Horowitz (a16z) and the Blockchain Association, have echoed similar criticisms of the proposals.

Magazine: Crypto Regulation – Does SEC Chairman Gary Gensler Have the Last Word?