- The Securities and Exchange Commission (SEC) denied the rulemaking petition filed by Coinbase.
- SEC Chairman Gary Gensler said current law is sufficient to protect investors.
- Commissioners Hester Peirce and Mark Uyeda issued statements disagreeing with the commission’s decision.
The U.S. Securities and Exchange Commission (SEC) rejected a petition to enact cryptocurrency-related regulations submitted by U.S. cryptocurrency exchange Coinbase.
SEC Chairman Gary Gensler said in a statement released Friday that he supports the commission’s decision. He cited three reasons for his views on the agency’s latest actions regarding the pursuit of clear regulatory rules.
“I am pleased to support the Committee’s decision for three reasons.“Gensler said.
“First, the cryptocurrency securities market is subject to existing laws and regulations. Second, the SEC is also approaching the cryptocurrency securities market through rulemaking. Third, it is important to maintain the Commission’s discretion in setting its own rulemaking priorities.”
Gensler says the current law applies to cryptocurrencies.
The SEC Chairman’s comments come amid pushback from government agencies over new, tailored cryptocurrency regulations and follow recent enforcement actions and lawsuits targeting major cryptocurrency companies and players for alleged securities violations.
These include Coinbase, Binance, and Kraken.
Meanwhile, the industry criticized the SEC for not taking any action to protect investors during the exchange crackdown following the collapse of cryptocurrency exchange FTX. But Gensler says existing laws are sufficient to protect investors and industry players.
“There is nothing in the cryptocurrency securities market to suggest that investors and issuers are less entitled to securities law protection. Congress could have said in 1933 or 1934 that the Securities Act applied only to stocks and bonds. Instead, Congress included more than 30 items in the definition of securities, including the term “investment contract.”“, the SEC Chairman pointed out.
Gensler argued that most cryptocurrency assets are investment contracts and therefore subject to federal securities laws. This year, a U.S. court ruled that XRP was not a security as the Commission claimed. However, despite the legal loss to Ripple, a subsequent lawsuit by the watchdog group listed several tokens as unregistered securities.
Noting the SEC’s rulemaking covering cryptocurrency securities, Gensler said he disagreed with Coinbase’s argument that “now is the right time to change the rulemaking.”
According to the SEC Chairman, several cases and initiatives related to cryptocurrencies are ongoing, the results of which could indicate whether changes to the regulatory framework are needed.
In separate statements, SEC Commissioners Hester Peirce and Mark Uyeda said they “disagree with the Commission’s decision.”
Director Uyeda and I responded today to Coinbase’s denial of the rulemaking petition: https://t.co/uBC9Bujhqd
— Hester Peirce (@HesterPeirce) December 15, 2023
Both commissioners noted that the petition raises key issues related to new technologies and that addressing them is “a key part of being a responsible regulator.”