Coinbase and the SEC: In Goliath Versus Gensler, Don’t Bet Against the Big Guy
Plus, digital wallets are blowing away other payment methods around the globe.
Number of the Week: $60 million (explanation below)
Coinbase and the SEC: In Goliath Versus Gensler, Don’t Bet Against the Big Guy
When you cover the business of money long enough, you realize that some financial regulatory battles are inevitable. Such is the case with the U.S. Securities and Exchange Commission (SEC) and its “forever war” on crypto. SEC chair Gary Gensler’s recent remarks can only be described as combative and largely unhelpful as the agency attempts to get its arms around the rapidly evolving world of crypto assets and powerful crypto exchanges like Coinbase and Binance.
In prepared remarks given at the Columbia Law School conference this week, Gensler talked about the role the agency plays in finance, and the importance of securities disclosure rules on things like climate, cyber risk, special purpose acquisition companies (SPACs), and executive compensation in protecting investors and for providing more efficient markets. He then got to the real point of his address: “There are participants in crypto securities markets that seek to avoid these registration requirements. No registration means no mandatory disclosure. Many would agree that the crypto markets could use a little disinfectant."
Crypto exchanges are clearly in Gensler’s crosshairs. In June 2023, the SEC charged Coinbase with operating its crypto trading platform as an “unregistered national securities exchange, broker, and clearing agency,” making “billions of dollars unlawfully facilitating the buying and selling of crypto asset securities.” It also charged the U.S.’s biggest crypto exchange for failing to register the offer and sale of its crypto asset staking-as-a-service program.
Coinbase then petitioned the SEC to create new rules specifically for the digital asset industry, which the agency refused to do. Coinbase is now taking on the SEC in two separate court battles, one appealing the SEC charges that it violated securities rules and the other accusing the agency of violating the law.