A representation of the cryptocurrency is seen in front of Coinbase logo in this illustration taken, March 4, 2022. REUTERS/Dado Ruvic/Illustration//File Photo Acquire Licensing Rights
NEW YORK/WASHINGTON, April 27 (Reuters) – Coinbase Global (COIN.O) has reiterated its view to the U.S. Securities and Exchange Commission that it has not broken any securities laws in its formal response to a legal threat received from the regulator, the firm said on Thursday.
Coinbase CEO Brian Armstrong and Chief Legal Officer Paul Grewal said the crypto exchange would like to list securities in the future but would not feel comfortable given the regulatory uncertainty, in a response to the SEC made public on Thursday.
"Coinbase does not list securities," Grewal said.
Last month, Coinbase said the SEC sent it a Wells notice – a formal declaration the regulator's staff intends to recommend an enforcement action.
An SEC spokesperson declined to comment, noting the agency does not acknowledge the existence or non-existence of investigations.
The incident is among the latest signs of escalating tensions between the crypto sector and the SEC, which has taken the position that many digital assets are securities and are operating illegally outside of its oversight. The SEC has increasingly sought to tackle what it considers a lack of compliance among crypto firm intermediaries
"No law or regulation authorizes the SEC to charge Coinbase for the alleged violations in the Wells notice," Coinbase's Grewal said, noting what he perceives as a change in the SEC Chair's views. "We are on the brink of a fight that doesn't need to happen, and frankly shouldn't happen."
As SEC chair, Gensler has argued the "Wild West" of crypto should be more actively regulated and that firms that deal with digital asset securities need to register with the agency.
Coinbase has appealed to a federal court to force the SEC to say whether it will create new rules for digital assets.
The firm's deputy general counsel, Katherine Minarik, said in an interview Coinbase will focus on growing outside the U.S. as needed.
"We are going to leave no stone unturned to push for regulatory clarity here," Minarik said.
Reporting by Chris Prentice; Editing by Leslie Adler
Our Standards: The Thomson Reuters Trust Principles.
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Chris Prentice reports on financial crimes, with a focus on securities enforcement matters. She previously covered commodities markets and trade policy. She has received awards for her work from the Society for Advancing Business Editing and Writing and the Newswomen’s Club of New York.
Thomson Reuters
Hannah Lang covers financial technology and cryptocurrency, including the businesses that drive the industry and policy developments that govern the sector. Hannah previously worked at American Banker where she covered bank regulation and the Federal Reserve. She graduated from the University of Maryland, College Park and lives in Washington, DC.
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