On March 22nd, Coinbase, a well-known crypto exchange, received a Wells notice from the U.S. Securities and Exchange Commission (SEC) regarding an unspecified portion of its listed digital assets. After a cursory investigation, it includes staking services Coinbase Earn, Coinbase Prime, and Coinbase Wallet.
The Wells notice is a way that SEC staff tells a company that they recommend the SEC take enforcement action for possible violations of securities laws.
Coinbase has repeatedly requested the SEC to provide clarification and guidance on the legality of its assets and services, but the SEC has not responded to its proposals.
According to the blog post, the company maintains that it is confident in its assets and services’ legality and will continue to operate as usual, despite the SEC’s notice. The company has proposed two different registration models to the SEC. But they have not responded to either of them.
The company believes that rulemaking and legislation are better tools for defining the law for the industry than enforcement actions. It has spent millions of dollars on legal support to build these proposals and repeatedly asked for the SEC’s feedback but received none.
Coinbase believes that the U.S. crypto regulatory environment needs more guidance and clarity and that regulatory uncertainty in the crypto industry is getting worse.
The blog post asserts that the company has continued to engage with the SEC and, in addition to developing a registration path, has repeatedly asked the SEC to engage in rulemaking for the industry.
The company filed a petition for rulemaking last summer and submitted another comment letter supporting the petition. Even courts are questioning the SEC’s inconsistent positions and lack of guidance to the industry.
However, Coinbase stated that it welcomes a legal process to provide the clarity it has been advocating for and to demonstrate that the SEC has not been fair or reasonable regarding its engagement with digital assets.
Nevertheless, despite all this, the blog post assures that the company’s products and services will continue to operate as usual, and the news does not require any changes to its current offerings.
Coinbase’s CEO Takes On SEC
Regarding SEC’s notice, Coinbase CEO Brian Armstrong expressed confidence in the company’s legal position and welcomed the opportunity to address the matter in court.
He argued that the company had been transparent in its S1 filing, which included 57 references to staking and a clear explanation of its asset listing process.
Furthermore, Armstrong claimed that the company had been actively seeking regulatory clarity and had engaged with the SEC over 30 times in the past nine months without receiving much feedback.
He criticized the SEC’s lack of consistency and clarity on crypto regulations, pointing out that Coinbase had already been licensed and regulated by other U.S. and international regulators.
The company plans to defend itself in court to establish some case law and promote greater regulatory clarity for the crypto industry.
Related Reading | Coinbase Challenges SEC On Core Staking Services, Urges Clarity On Securities Regulation