The public listing of Coinbase on the stock exchange was a noteworthy event in the world of blockchain. This turn of events shouldn’t be seen as a stamp of approval on the company’s business operations, the U.S. Securities and Exchange Commission (SEC) argued recently in the court case SEC vs Coinbase.
The SEC emphasised that its approval of Coinbase’s S-1 application to go public should not be misconstrued as endorsing the company’s business structure or conformity with regulations. This counterargument comes after Gemini co-founder, Cameron Winklevoss and others queried why the SEC would permit a non-compliant company to be public, considering the regulatory body’s prime objective is to safeguard U.S. consumers.
A pivotal step for U.S.-based companies wishing to list their shares on national stock exchange is submitting an S-1 filing to the SEC. Detailed information about the company’s business structure and the allocation of revenues from an Initial Public Offering (IPO) must be provided as part of this filing.
Following these statements from SEC trial counsel, Peter Mancuso, Judge Katherine Polk Failia responded with scepticism. She raised questions about the SEC’s diligence into Coinbase’s business operations, expressing her assumption that the SEC would have advised Coinbase against any potential securities violations. Mancuso reiterated the focus of the SEC’s S-1 filings being more on sanctioning company disclosures rather than approving a company’s business structure.
This case presents mixed views on the regulatory dimensions of the blockchain industry and public listings. While public listing ensures more operational transparency, potential regulatory non-compliances cast a shadow over the credibility. Coinbase is now contending for an early dismissal of the case, asserting that the SEC has lodged charges despite the company providing in-depth descriptions of its business plans and operations before the IPO.
Internationally, regulatory bodies are taking actions against crypto firms for staking, alleging infringement of securities laws. It’s crucial for a clear line to be drawn between approving disclosures and endorsing business operations, to avoid such complications and legal battles in the future.
The SEC’s argument throws it back to the companies to show due diligence to ensure their operations comply with laws. Simultaneously, it casts a question mark over the degree of regulatory scrutiny being applied to these fast-evolving blockchain companies before they go public. The debate going forward is likely to revolve around augmenting the oversight and regulatory diligence steps to stay in stride with the rapid innovative leaps in blockchain industry.
Source: Cointelegraph
