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By Paul Grewal, Chief Authorized OfficerTl;dr: Coinbase doesn’t record securities on its platform. Interval.We now have stated it earlier than, however given in the present day’s occasions, it bears repeating.Earlier in the present day, following a Division of Justice (DOJ) investigation right into a former Coinbase worker’s misuse of confidential Coinbase data associated to itemizing choices, the Securities and Change Fee (SEC) individually filed securities fraud fees in opposition to this particular person associated to this wrongdoing. The SEC alleges that 9 digital property concerned are securities. The DOJ reviewed the identical info and selected to not file securities fraud fees in opposition to these concerned. As CFTC Commissioner Caroline Pham said, that is “a putting instance of ‘regulation by enforcement’” by the SEC.We agree with Commissioner Pham and, respectfully, 100% disagree with the SEC’s determination to file these securities fraud fees and the substance of the costs themselves. Let me clarify why.Seven of the 9 property included within the SEC’s fees are listed on Coinbase’s platform. None of those property are securities. Coinbase has a rigorous course of to research and overview every digital asset earlier than making it accessible on our change — a course of that the SEC itself has reviewed. This course of consists of an evaluation of whether or not the asset might be thought-about to be a safety, and in addition considers regulatory compliance and data safety features of the asset. To be specific, the vast majority of property that we overview should not in the end listed on Coinbase.We cooperated with the SEC’s investigation into the wrongdoing charged by the DOJ in the present day. However as a substitute of getting a dialogue with us in regards to the seven property on our platform, the SEC jumped on to litigation. The SEC’s fees put a highlight on an vital downside: the US doesn’t have a transparent or workable regulatory framework for digital asset securities. And as a substitute of crafting tailor-made guidelines in an inclusive and clear manner, the SEC is counting on these kind of one-off enforcement actions to attempt to convey all digital property into its jurisdiction, even these property that aren’t securities.Simply this morning (and with no prior information of the timing of the costs mentioned), Coinbase filed a petition for rule making with the SEC calling for precise rule making so the crypto securities market has an opportunity to develop. We fear that in the present day’s fees counsel the SEC has little curiosity on this most elementary position of regulators.However within the absence of a concrete digital asset securities regulatory framework from the SEC, we stay assured that Coinbase’s rigorous overview course of retains securities off Coinbase’s platform. We stay desperate to share our perspective with the SEC, particularly by means of a proper rule-making course of desperately wanted.
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