Coinbase CEO Says SEC Refusal to Create Clear Rules For Crypto Is a Win For the Industry, Here’s Why

Brian Armstrong, the CEO of U.S.-based exchange Coinbase, has reacted to the SEC’s refusal to establish more transparent rules for crypto.  

For context, the Securities and Exchange Commission (SEC) denied Coinbase’s request for rulemaking yesterday, emphasizing that there are already sufficient regulations in the market. 

Explaining the rationale behind the denial, SEC Chair Gary Gensler said existing securities laws already apply to the crypto securities market. Gensler cited two Supreme Court cases to back his argument that existing securities laws also apply to crypto assets. 

A Nice Small Win for Crypto 

Reacting, Coinbase CEO Brian Armstrong described the SEC’s refusal to establish more transparent rules for crypto as a “nice small win” for the industry. 

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According to Armstrong, Coinbase successfully compelled the securities regulator to respond to its petition for crypto-specific rules. With the SEC refusing to provide more transparent rules for crypto, Armstrong said the U.S. leading trading firm would challenge the response in court. 

“The question is why doesn’t the SEC want to clarify outstanding regulatory questions for the crypto industry?” he quizzed. 

Nice small win. We went to court to challenge the SEC’s refusal to create clear rules for the industry – and it worked (a court compelled them to respond).

Now that they’ve formally responded (with a no!) we can challenge their response in court, which helps us get one step… https://t.co/3RcTk1OVcp

— Brian Armstrong 🛡️ (@brian_armstrong) December 16, 2023

Coinbase Sues SEC Over Crypto Regulation 

In the meantime, Coinbase filed a lawsuit against the securities regulator in the Third Circuit, challenging the commission’s denial of its rulemaking petition. 

Coinbase’s Chief Legal Officer Paul Grewal shared the development in a tweet yesterday. 

1/3 Promise made, promise kept: we are now on file with Third Circuit to challenge the SEC’s arbitrary and capricious denial of our petition for crypto rulemaking. We again appreciate the Court’s consideration.

— paulgrewal.eth (@iampaulgrewal) December 15, 2023

Coinbase’s latest lawsuit against the SEC adds to the list of legal battles between the parties. Recall that the SEC charged Coinbase with operating an unregistered securities exchange in June. It also claims that Coinbase facilitates the trading of crypto assets deemed as securities, including ADA, SOL, and MATIC. 

Expectedly, Coinbase denied the SEC’s allegations. In October, the exchange filed its final motion to dismiss (MTD) the case. It argued that crypto assets listed on its platform do not constitute securities, adding that the regulator has no authority to regulate the emerging market. 

The court has yet to issue a decision on the matter, with legal analysts speculating that the ruling could be released next year.