The US Chamber of Commerce, the world’s largest business organization with around 300,000 members, has recently backed Coinbase‘s request for the US Securities and Exchange Commission (SEC) to create comprehensive rules for cryptocurrency. It seems that despite the SEC’s claims of being the primary regulator of digital assets, it has been reluctant to answer a pressing question— which digital assets can be considered securities under federal law?
Coinbase filed a petition in July 2022, urging the SEC to propose and implement rules for digital assets. Unfortunately, the SEC hasn’t been proactive in addressing Coinbase’s petition, even as they express intentions to start enforcement proceedings against the exchange for listing allegedly unregistered securities. The delay in rulemaking has incited notable consequences, with the Chamber pointing out the “substantial economic harm” caused by the confusion within the industry.
To make matters worse, the regulatory chaos seems to be intentional. The SEC allegedly utilizes a haphazard, enforcement-based approach as it claims sweeping authority over digital assets, thereby muddying the waters of regulation.
In an effort to compel the SEC’s response, Coinbase took the issue to a federal appellate court in Philadelphia last month, arguing that the agency had been neither reasonable nor prompt in addressing their rulemaking petition. But will this actually solve the problem?
On one hand, clearer regulations can provide much-needed guidance for the industry, allowing businesses to innovate without fear of stepping on potential legal landmines. On the other hand, there are concerns that stringent regulations may stifle innovation in the rapidly-evolving world of digital assets.
The situation becomes even more tangled with Coinbase locked in a dispute with the SEC following a Wells notice issued against the exchange in March. A Wells notice indicates that the SEC is ready to recommend formal charges against an entity. In response, Coinbase submitted a 73-page document on April 19, arguing that the SEC had not complied with the law by allowing companies like Coinbase to register with the agency.
While SEC Chair Gary Gensler insists that numerous cryptocurrencies qualify as securities and fall under his agency’s jurisdiction, many firms are left grasping at straws as they try to navigate the murky waters of digital asset regulations. One thing is clear—the lack of well-defined rules is hindering the industry, and it’s high time that the SEC took appropriate action to clarify its stance on cryptocurrency regulations.
In conclusion, decisive regulatory action is needed to address the ongoing uncertainty surrounding the legal status of digital assets. This can potentially pave the way for businesses to operate confidently within the parameters of clearly-defined rules, ultimately fueling innovation and growth in the crypto space. However, striking the right balance between stringent regulations and fostering innovation will be a delicate task for the SEC to tackle.
Source: Cryptonews
