Coinbase Vs.SEC: Commission Asked For Rule Clarification On Digital Assets

Coinbase has asked the Securities and Exchange Commission to clarify which digital assets are to be treated as securities in response to the litigations filed by SEC against it a few days back. Along with this, SEC is also asked to give the answers to the questions raised by coinbase coinbase - support@coinbase.com WalletCentralised Exchange regarding public consultations.

Currently, the SEC is being highly criticized for the existing regulations governing digital assets in the crypto industry. However, Coinbase stressed the importance of the establishment of clear standards, given the market crash that has bankrupted various companies and has wiped out trillions and billions of dollars over the past few months.

Foundational hurdles

There are some major foundational hurdles regarding Crypto, one of which is that securities rules do not work for digitally native instruments. The petition states “digitally native securities” as being “recorded and transferred using distributed ledger technology” without reliance on centralized certified forms of ownership that typically characterize traditional financial instruments. 

faryar shirzad faryar shirzad Faryar Shirzad DirectorEconomistChief policy officerAttorney , Coinbase’s first chief policy officer, argues that Crypto needs an updated rule book for safe guidance and fair practices and that crypto assets that do not fall in the category of Securities should be out of these rules. The execution and the settlement of all the transactions are done in real-time and are permanently recorded on blockchains with equal access to all users.

So, due to these features, the assets’ rules are both unsuitable and incomplete. The petition further clarifies that the US does not have any clear and definite rules governing the trade of these digital assets. The SEC is expected to take note of this. 

Continuous Conflict

According to the current Chairperson of SEC-gary gensler gary gensler Gary Gensler is the chairman of the U.S. Securities and Exchange Commission (SEC). His studies in finance and blockchain at MIT have helped him develop U.S. cryptocurrency regulations and policies. Quick Facts Full name Gary Scott Gensler Birth 18-10-1957, Baltimore, Maryland, United States Nationality American Education MBA from the University of Pennsylvania Marital status Married to Francesca Danieli (1986-2006) Net worth Estimated $100 million   Gensler has advocated for enhanced supervision of digital assets, seeking to regulate cryptocurrencies similar to securities. His work at the SEC has focused on safeguarding investors, regulating crypto exchanges, and establishing stablecoin policies.   Gary Gensler - Career Highlights 1997 – Became Assistant Secretary of the Treasury. 2009 – Led CFTC, regulating financial derivatives post-2008 crisis. 2018 – Taught blockchain and crypto at MIT. 2021 – Appointed SEC Chairman, focusing on crypto regulations. 2022 – Proposed stricter rules for crypto exchanges. 2023 – Took legal action against major crypto firms. 2024 – Advocated for stronger stablecoin and DeFi regulations.   Gary has collaborated with multiple lawmakers in formulating crypto policies. Even with disagreements with crypto investors regarding crypto policies, he continues to be a key player in the changing dynamic between regulatory frameworks and blockchain advancement.   Awards & Recognitions of Gary Gensler Year Institution  Description 2009 U.S. Treasury Financial Regulation Leader 2018 MIT Blockchain & Crypto Educator 2021 SEC SEC Chairman Overseeing Crypto Policies 2023 Bloomberg Most Influential Regulator in Crypto 2024 Forbes Top Policy Maker in Digital Assets   Useful Links to Connect With Gary Gensler Platform Link X (formerly Twitter) twitter.com/GaryGensler CFTC website Chairman Gary Gensler   Chairman , proper registration is required for the qualification of these digital assets as securities with authority. Gary Gensler has sharply repudiated looking into the tokens that fit the definition of securities. 

Currently, 9 tokens are labeled as securities by the SEC, including an Ethereum-based one called Amp, which has an overall market cap of about $700 million. However, the tokens were revealed in a complaint filed this week by the SEC against Coinbase, accusing 3 men of Insider Trading, including former Coinbase product manager Ishan Wahi, his brother, and a friend. As per the reports, the accusers earned over $1.1 million in illegal profits by playing with the exchange’s Confidential information.