The US Securities and Exchange Commission (SEC) has expressed willingness to support crypto intermediaries in achieving compliance, according to a recent statement from the agency’s Chair Gary Gensler. The comments were made during the Atlanta Fed’s 2023 Financial Markets Conference, amidst growing tension between regulators and exchanges on the registration process.
Gensler criticized the business models of crypto exchanges, claiming that they are typically built on noncompliance and conflicts of interest. He emphasized the issue of commingling customer funds, which is a major concern for regulatory bodies. In response, he urged crypto platforms to register with the SEC, asserting that many cryptocurrencies qualify as securities.
However, crypto exchanges like Coinbase have pushed back against such claims. After receiving a Wells Notice in March, Coinbase maintained its stance that it does not list securities. A Wells Notice is a letter from SEC staff indicating that the agency is prepared to recommend formal charges to the five-member commission.
According to Coinbase’s Chief Legal Officer Paul Grewal, the company has sought clarity from the SEC regarding the application of securities laws to the crypto space. However, their requests have been met with silence. The SEC’s stance on crypto has also taken its toll on other exchanges. Earlier this month, Bittrex US filed for bankruptcy following the SEC’s declaration that the platform was running an unregistered securities exchange.
Coinbase has previously urged the SEC to establish a clear regulatory framework for digital assets, submitting a petition to this effect in July 2022. Despite these calls for regulatory clarity, Gensler responded by stating that the necessary rules have already been published. In his words, the crypto field has been “operating largely noncompliant.”
Arguments from both sides signal a possible deadlock in discussions concerning adequate crypto regulations. On one hand, the SEC’s request for registration compliance seeks to mitigate the risks associated with commingling funds and conflicts of interest in the crypto space. Conversely, exchanges such as Coinbase argue that the regulatory priorities of traditional securities are not easily transferred to their industry and that a more tailored approach is necessary.
It remains to be seen whether the SEC and affected crypto exchanges will reach a consensus on appropriate regulations for the rapidly evolving digital assets market. In the meantime, crypto enthusiasts and market participants continue to closely monitor the situation, hoping for increased regulatory clarity to ensure a stable and secure environment for their investments.
Source: Cryptonews
