Coinbase Files Petition to the SEC Calling for Better Cryptocurrency Regulations in the US

Coinbase has filed a petition with the SEC to improve rulemaking on digital asset securities.

By Shomik Sen Bhattacharjee | Updated: 22 July 2022 14:46 IST

Coinbase Files Petition to the SEC Calling for Better Cryptocurrency Regulations in the US

Photo Credit: Unsplash/ PiggyBank

Coinbase highlights its complaints about the current regulatory framework in its petition

Highlights

Coinbase has filed a petition calling for better regulatory clarity
The exchange wants the SEC to come up with a regulatory framework soon
The SEC has announced charges against three former Coinbase employees

Coinbase has filed a petition to the US Securities and Exchange Commission (SEC) criticising the existing state of cryptocurrency regulation in the country. The global crypto exchange' Chief Policy Officer Faryar Shirzad explained the reasons behind the petition in a blog post Thursday, saying that without effective regulation the US will fall behind in digital asset innovation. The company stressed the importance of establishing guardrails, given the market meltdown that has wiped out trillions of dollars and bankrupted several companies over the past few months.

"When it comes to crypto securities there is a significant, foundational hurdle that has prevented that market from maturing. That hurdle is the fact that the securities rules simply do not work for digitally native instruments,” Shirzad wrote.

"Crypto assets that are securities need an updated rulebook to help guide safe and efficient practices,” Shirzad further argued. "Crypto assets that are not securities need the certainty of being outside those rules. Anything short of that will have the effect of entrenching incumbent technologies at the expense of innovation and ultimately, consumers."

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In the petition, Coinbase Chief Legal Officer Paul Grewal outlined the key challenges associated with regulating cryptocurrencies, including a lack of clarity on which digital assets constitute securities, and conflicting or unnecessary requirements. Grewal also listed a series of questions for the SEC to consider in creating a regulatory framework, addressing classification, issuance, trading and custody.

Meanwhile, the SEC has claimed in a new court filing that at least nine digital assets listed on the cryptocurrency exchange Coinbase are unregistered securities.

The nine assets in question are AMP, Rally, DerivaDEX, XYO, Rari Governance Token, LCX, Powerledger, DFX Finance, and Kromatika.

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The SEC and the Department of Justice have also announced charges against former Coinbase Product Manager Ishan Wahi and two others, accusing them of running an insider-trading scheme that earned them more than $1.1 million (roughly Rs. 8.8 crore) in illicit gains. Wahi allegedly tipped off his brother Nikhil Wahi and his friend, Sameer Ramani, about upcoming token-listing announcements on the crypto exchange.

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