Coinbase has published a blog post that accuses the US Securities and Exchange Commission (SEC) of threatening the company with legal action.
The SEC issued a Wells notice to Coinbase regarding a portion of the company’s digital assets and several services following an investigation. The notice serves as a recommendation that the SEC takes enforcement action for possible violations of securities laws.
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Coinbase has branded the regulator’s actions as threatening on the grounds that, while it does not represent a formal charge or lawsuit, it could lead to one. The news does not require any changes in Coinbase’s products and services that continue to operate as usual.
Coinbase CEO, Brian Armstrong, spoke to CNBC about the Wells notice from SEC. Armstrong said that despite meeting with SEC over 20 times last year Coinbase did not receive any feedback that it should be doing anything better or differently.
Armstrong added: “I think we’re going to have to actually end up going to court to get the clarity we need and create the case law.”
The accusation follows the announcement by the international securities watchdog (IOSCO) of the first global approach to regulating cryptoasset and digital markets.
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By GlobalDataThe IOSCO has proposed 18 measures that will implement safeguards from mainstream markets, eliminating conflicts of interest between the different parts of a crypto transaction.
The standards are expected to be finalised by the end of 2023.
The collaborative approach to regulation aims to implement lessons learned from the collapse of the FTX exchange.
However, Coinbase and blockchain services company Ripple have even gone as far as to signal plans to move business overseas to try to send a message to US politicians, according to CNBC.
Contrary to Coinbase’s stance, the industry is calling for greater regulation and a more unified approach given that it currently only has to comply with anti-money laundering checks, according to Reuters.
Reuters reported that, Jean-Paul Servais, who chairs the watchdog, said the recommendations are a “turning point in addressing the very clear and proximate risks to investor protection and market integrity risks”.
In a press release by the IOSCO, Servais is quoted saying “with 130 members around the world regulating more than 95% of the world’s securities markets, IOSCO is best positioned to deliver an effective and globally consistent set of policy recommendations,”
Antoni Trenchev, CEO and co-founder of Nexo, believes that collaboration on regulatory issues will bring the benefits of blockchain/crypto investors with a clear framework and improve investor protection.
Trenchev said “The proposed plan will help those working to bring the benefits of blockchain technology and digital assets to investors within a clear framework of transparency, security and good governance standards. This will increase investor protection and improve the market’s integrity for the benefit of all its participants.”
LIM Tuang Lee, Chairperson of the IOSCO Board-Level Fintech Task Force, set up to develop the policy recommendations, said “It is time for regulators to work together across borders and various jurisdictions to ensure that investor protection and market integrity are upheld in crypto-asset markets.”
GlobalData associate analyst, Suneet Muru believes the SEC will definitely want to take a collaborate approach, but on its terms. Muru points out that the SEC has stood its ground with regards to regulation via enforcement.
He says: “In its view, it has everything it needs at its disposal to enforce the idea that cryptocurrencies are securities (rather than working with crypto businesses to promote compliance), and look to continue to do so.”
Muru concludes that the implementation of regulation on crypto companies will become commonplace globally; “there’s a general belief that when the US passes some clear crypto regulations into law, that other countries will follow suit due to how much VC money comes into the US crypto space, and how many popular crypto businesses originate in the US.”
