If the US Securities and Exchange Commission’s (SEC) Wells Notice against Coinbase clarifies anything, it’s that the agency is at war with the crypto industry. Coinbase is the flagship of the American crypto industry and has always championed regulatory compliance and license registration – otherwise the exchange would not have been able to approve its IPO either.
Still, the SEC decided to send a Wells Notice to Coinbase that focused on asset staking and listing. A Wells Notice usually precedes an enforcement action, CEO Brian Armston said.
In fact, as Coinbase CLO Paul Grewal wrote via Twitter, the exchange has met with the SEC more than 30 times over the past nine months to find a way to register — with no response. When Coinbase filed for an IPO in 2021, the SEC granted approval. “Now they’ve changed their minds about what’s allowed,” Grewal said.
A war on crypto and how the industry will win
In a blog post, Coinbase explained what is most shocking about the Well Notice: “SEC officials told us they identified potential securities law violations, but not much else. We have specifically asked the SEC to determine what assets on our platforms they believe may be securities, and they have declined.”
The crypto community is outraged at how the SEC refuses to do its job by not creating clear rules while regulating with enforcement actions. This makes it clear: the war can only be won in court.
Fortunately, Coinbase is more than combative. “So what happens next? We use the court system to finally bring clarity to the crypto industry in the US. Ironically, establishing a case law may be our best shot at gaining the regulatory clarity the industry deserves,” said Grewal.
Jake Chervinsky, chief policy officer of the Blockchain Association, expressed his dismay at Wells’ announcement to Coinbase after the company spent “an exceptional amount” of time and resources working in good faith to seek regulatory clarity from the SEC . Still, Chervinsky is hopeful:
Luckily, Coinbase is ready to fight and in a strong position to legally do so successfully. Remember, the SEC doesn’t make laws. Only allegations are made that ultimately have to be examined in court. Often, like here, the SEC gets it wrong.
Other well-known bigwigs in the crypto industry take a similar view. Scott Melker, The Wolf Of All Streets, claims via Twitter that Coinbase will bury the SEC in court as they have the war chest and the facts on their side. Melker writes:
The justice system has delved into the SEC in every available situation. Let’s go. […] This will catalyze the industry in the US in ways the SEC is completely unprepared for. Gary is toast.
Caitlin Long, Founder and CEO of crypto-friendly Custodia Bank adds:
IT SHOULD BE CRYSTAL CLEAR NOW that the Biden administration wants all cryptos (even the legitimate parts of it) to be banned from the US […] The job of the SEC is to protect investors. How did it protect investors to list a company if it violated securities laws?
XRP community advocate Jeremy Hogan also notes that the SEC is no longer an independent agency making rules based on the law, but a “political enforcement arm of the government and its views,” adding, “Only the Courts can save us now.”
Author Andrew Samuel was also optimistic:
As a reminder, a few weeks ago the SEC was torn apart by Grayscale attorneys and an appellate panel at the DC Circuit. You can bet Coinbase will do the same in the coming months/years. These two companies, whatever you think of them, are now the torchbearers to stop the death of crypto in the US.
At press time, Bitcoin is trading at $27,630, digesting yesterday’s news.
BTC price digestion FOMC and the Coinbase news, 1 hour chart | Source: BTCUSD on TradingView.com
Featured image from iStock, chart from TradingView
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