This morning in a conference room high above Manhattan, a crowd of lawyers and journalists got a preview of how the upcoming battle between the U.S. Securities and Exchange Commission (SEC) and Coinbase may unfold. The discussion, sponsored by Rutgers School of Law and Lowenstein Sandler, revolved around topics beyond legal formalities, including principles and theories behind cryptocurrency’s existence in the United States.
SEC Director of Enforcement Gurbir S. Grewal argued that the lawsuit against Coinbase was a logical consequence of the exchange’s lack of response to clear signals over the past five years, beginning with the 2017 DAO report. He said that despite warnings in other sectors, there has not been increased compliance in the crypto space.
Grewal also touched upon the decision to target exchanges like Coinbase and Binance, instead of continuing to pursue individual actions against violating token issuers. He cited limited resources and the need to make judgment calls as the reason behind this direction. On the topic of decentralized exchanges (DEXs), Grewal countered claims of decentralization by mentioning that they have observed entrepreneurs and individuals at the center of these projects.
In the opposing corner was Coinbase Chief Policy Officer Faryar Shirzad. He hinted at the possibility of the SEC trying to get ahead of an ongoing legislative process, which would be unusual for a regulatory agency. Shirzad also raised concerns about the SEC’s approach undermining U.S. competitiveness and innovation and potentially pushing exchanges out of the country. He argued that this could disconnect the nexus between policy and U.S. law, insisting that this should be a matter of national strategy.
Shirzad believes that blockchain is the value layer of the internet with profound implications for various industries. Furthermore, he pointed out that trying to fit crypto regulation within existing laws, such as the SEC’s investor protection mandate, may harm the industry’s future prospects in the United States.
The central issue at stake appears to be the different battlegrounds on which each side wants to fight. The SEC is focused on the enforcement of existing law, whereas Coinbase’s concerns revolve around shaping an unwritten future through innovation and competitiveness. As the legal showdown looms closer, it becomes increasingly clear that both sides have strong reasons to defend their positions, yet the path towards a mutual understanding remains uncertain.
Source: Coindesk
