Several crypto insiders are standing with Coinbase in its battle with the U.S. Securities and Exchange Commission (SEC) over the agency’s “come in and register” crusade aimed at the digital assets sector. The SEC insists that there is nothing distinct or special about crypto that warrants different treatment under securities laws. However, crypto groups joining Coinbase argue that the regulator is deliberately hindering the young industry while sowing confusion among countless firms. The developments come as the U.S. Court of Appeals has granted these groups’ petition to join the case.
Paradigm, a digital assets business investment firm, filed an amicus brief, stating that the digital asset industry is “stuck in limbo, simultaneously told to come in and register yet having no effective means of doing so.” The company added that the SEC’s actions have crippled a nascent industry and sowed confusion among countless firms unable to conform to the SEC’s view of the law or challenge that view in court.
Chamber of Commerce’s Criticism
Even the U.S. Chamber of Commerce has criticized the SEC’s behavior, stating that nobody knows for certain if any digital assets are considered securities under federal law. This has immense implications for those involved in the $1 trillion digital asset economy, and it is the threshold regulatory question from which all others flow. The criticisms come as the SEC seeks to “paint the good and bad organizations with the same brush.”
Crypto Council for Innovation’s Stance
The Crypto Council for Innovation, an industry advocacy group, also weighed in, saying that the SEC’s aggressive stance towards those seeking to comply impairs investors’ ability to differentiate good organizations from bad ones. Such actions may lead to investors steering clear of the crypto market altogether, thereby impacting the young industry.
SEC’s Enforcement Action
The legal dispute between the SEC and Coinbase may soon be amplified, as the agency has warned Coinbase that it’s going to be targeted with an enforcement action for violating securities laws. SEC Chair Gary Gensler has repeatedly invited crypto trading platforms and token offerings to come into the agency and properly register. In a video released last month, he cautioned investors about crypto, accusing much of the industry of openly flouting securities laws. The ramping up of SEC lawsuits and court actions make it increasingly likely that judicial rulings will steer the course of crypto oversight in the U.S.