An increasingly hostile US approach to crypto has been met recently with industry responses criticising the SEC for failing to provide a pathway to compliance. This included Coinbase responding to a recent Wells notice with a 15 minute video explaining their repeated meetings and requests for collaborative exploration of solutions.
Coinbase recently moved more firmly, seeking an order that the SEC respond to a 2022 petition Coinbase filed with the SEC, which petition in turn sought clarity from the SEC regarding their approach to digital assets and the interpretation of securities laws.
The wheels of justice have begun moving in that case, with the SEC being ordered to provide reasons within 10 days as to why it has not responded to the petition.
The petition sought that the SEC:
propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods, including potential rules to identify which digital assets are securities
The petition also observed:
The U.S. does not currently have a functioning market in digital asset securities due to the lack of a clear and workable regulatory regime. Digital assets that trade today overwhelmingly have the characteristics of commodities
and sought:
new rules facilitating the use of digital asset securities would allow for a more efficient and effective allocation of capital in financial markets and create new opportunities for investors.
Specifically Coinbase sought only rules for digital assets which were securities, namely:
a transparent and collaborative process to engage directly with the SEC as a means to initiate a discussion about what the SEC can do within its own authority to provide clarity and certainty regarding the regulatory treatment of digital asset securities.
It remains to be seen what position the SEC will take concerning this petition, but it certainly throws down a gauntlet to the recent approach of Chair, Mr Gary Gensler, who asserts nearly all digital assets are securities but was unable to explain whether one of the most popular crypto-assets, Eth, was a security or not under US law.