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SEC Responds To Coinbase Request For Action: 'No' (blockworks.co) 58

Posted by msmash from the tussle-continues dept.
The Securities and Exchange Commission has issued a response to Coinbase's complaint requesting that the agency establish regulatory clarity for the industry. From a report: In an April mandamus petition, Coinbase demanded federal courts to instruct the SEC to act and issue clear guidelines for crypto exchanges and companies. In its response, released Monday evening in New York, the SEC alleged Coinbase has no right to mandamus, which orders a government agency to fulfill certain duties.

"Perhaps recognizing this, Coinbase instead asserts that this Court should compel the Commission to act on Coinbase's recently filed rulemaking petition," the SEC wrote in its response. "But no statute or regulation requires the Commission to take such action on a specific timeline." The SEC, in its response, suggests that "mere months have passed since Coinbase's petition was filed and even less time has elapsed since Coinbase supplemented the record." The agency continued that "deliberating over the kind of significant changes sought by Coinbase, which could affect both crypto assets and the securities markets more generally, takes time -- including, as here, time to weigh whether or not to initiate a rulemaking proceeding about such topics in the first instance. This is particularly true given the Commission's active regulatory and enforcement agenda in this area..." Further reading: US Chamber of Commerce Slams SEC, Backs Coinbase in Legal Fight.
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SEC Responds To Coinbase Request For Action: 'No' More

SEC Responds To Coinbase Request For Action: 'No'

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  • Have a look at it here [duckduckgo.com]

    I can't actually tell if the SEC is moving slow or grinding them down. The uncertainty is going to chase off all their investors though. And they don't have the dosh to buy off enough Senators to get a law through.
    • Wah Wah Wah Wah

      Weren't all their investors mostly just pension funds & other public money they had managed to ensnare. In which case, good riddance, i guess
    • It's an admission that they can't come up with decently well thought out rules ex ante. It's tantamount to saying "do what you need to do, we'll see later if we like it or not".

      • If I want to build a plant synthesizing chemicals that nobody has made before, I don't demand a new regulatory framework to do it in. I get to inherit the existing regulations as a starting point. I can't say, "My chemicals are not on the list, so your rules can go hang." I still have to adhere to water and air quality standards, testing, etc..

        Even as a layman I can look at the way these things are traded and used, and I can see that they are massively similar to stocks and (to a lesser extent) currencies.

        • I don't demand a new regulatory framework to do it in
           
          Neither is Coinbase. They simply want the SEC to point to what criteria of a cryptocurrency would determine if it is a security and if it isn't. It's a reasonable request

          • Did you read the submission? I did. https://www.sec.gov/rules/peti... [sec.gov]

            Well... to be honest, I read about 25% of it. It's quite dense, and full of dissembling and legal-weasel-ese. They want parts to be treated as commodities, lots to be "other". Their complaints about regulatory oversight range from "too complicated" to "some of our market participants don't wanna". They refer to stocks as "ownership stakes in complicated public companies", and say that they don't return to investors through dividends or int

          • They simply want the SEC to point to what criteria of a cryptocurrency would determine if it is a security

            According to US Law: 15 USC 77b(a)(1)

            The term “security” means any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights,

            • The SEC (well, Gensler) stated that Bitcoin is not a security. That throws your whole conclusion out the window and highlights exactly why Coinbase insisted on more clarity
               
              https://www.investopedia.com/news/sec-chair-says-bitcoin-not-security/

              • It comes down to how it is used.

                Currency is not a security -so long as it is used as a currency.

                A bitcoin is a currency, so not a security... but a share of a bitcoin, held in anticipation of increasing value, is a security.

                Same with a Euro. A Euro is a unit of currency = not a security. But if I buy a share of some amount of Euros as an investment, my shares are a security -even if my share is one Euro.

                If I put a dollar in a bank in a checking/savings account... it is not a security. If I put a dollar i

        • Dude, you are suggesting that we fine all car owners who do not properly tie their cars to the hitching post. You can make strong arguments that individual crypto assets are currencies, securities, a digital beanie baby, or gambling. And they do. People and orgs lump all crypto in one basket and make whatever classification buttresses their praise or vilification without deeper analysis. The SEC is afraid to make general guidance or to make a clear statement about a particular crypto asset, to avoid acc

      • It's tantamount to saying "do what you need to do, we'll see later if we like it or not".

        No. They are saying: "Follow the existing rules. They apply to everyone. If additional rules are needed, specific to crypto, they will be added in time."

  • Not really sure what coinbase expected. I am sure they think they are the hottest thing on earth since sliced bread but Even larger companies in more traditionally regulated markets don't have the power to dictate SEC position. These regulations need a long time to think through and are not made for one single company

    • Brought to you by the same type of people who think they can bring the McRib back in the off-season through public protest alone.

      • Brought to you by the same type of people who think they can bring the McRib back in the off-season through public protest alone.

        Now there's an interesting phenomenon. I mean, the McRib is, at most, reconstituted meat-like product. Why there is an "off season" for it remains one of the most mysterious of all corporate mysteries.

        • Re: (Score:1)

          by rgmoore ( 133276 )

          I've seen two explanations for the irregular appearance of the McRib:

          • It doesn't sell well enough to earn a permanent spot on the menu, but it does sell well when it's a limited time item. People who like it rush to buy it because they don't know when it will be back, so they need to get it while it's available. More importantly, people who wouldn't go to McDonald's otherwise will go there during the limited availability, so it's bringing in customers who wouldn't otherwise buy something else.
          • Because th

          • The second one is the actual true explanation; the McRib reappears when the market has a surplus pork supply, and that's the only time they can actually afford to produce it.

        • Really? I thought the McRib was almost entirely ground up pork shoulder. Which I approve of. Pork shoulder is damned tasty.

    • There's also the necessity of alignment with other jurisdictions, in particular the EU. The idea that one company can go around demanding swift actions from the SEC is absurd on multiple levels. The SEC and other securities regulators didn't create this crisis, a pack of incompetents and bad actors did, so get in line folks. Welcome to the DMV of investment regulation.

      • Considering that most of the harm in this sector is based on bad actors exploiting an absence of regulation, I think there should be a sense of urgency here. If you look at the shocking lack of controls at FTX, or the fantasy mechanics of Luna, or the sketchy lending and ToS at Celsius, you see a bunch of scammers taking advantage of the refusal to regulate. Just doing random enforcement turns it into a game of whack-a-mole. SEC is hoping crypto just goes away, because, I would imagine, their masters have n

        • There is plenty of regulations, there's just been a total absence of enforcement. That tends to happen when millions of dollars flow into politician's pockets. The fraud and corruption is so blatant and in-your-face now that it can't be ignored any longer yet some politicians are STILL pushing back against it.

    • I think they expected this big middle finger, and I also think they think they're going to parlay it into a complaint of some kind. Wah wah wah, the SEC won't tell me how to not be a shithead, so I had to shoot your dog.

    • It's important to show that they tried an appeal to the courts before spending all that money to get Congress to force the SEC to do what they want.

  • Proposed SEC Guidelines (Score:5, Insightful)

    by 93 Escort Wagon ( 326346 ) on Tuesday May 16, 2023 @01:36PM (#63526411)

    Seems easy enough to me...

    "The SEC has determined that cryptocurrencies are a scam. Our guidance is that all investors should keep far, far away from them. Individuals who insist on participating should follow the same common-sense guidelines one should employ when vacationing in Las Vegas - set (and stick to) a budget, and assume you're going to lose all that money. "

    • The Nevada Gaming Commission has very extensive and explicit rules on how those casinos need to operate. This type of response would delegitimize the SEC, who can't even provide guidance on how things should operate.

      • Lazy fuck., just get off your ass and work, maybe you could pay your own mortgage.

        go ahead, waste your sock mod points, this will keep coming back under new accounts, it will always be visible

  • Coinbase is trying to put the SEC into an unwinnable situation. On the one hand, there's a long, detailed process for issuing new regulations. They have to be open to public comment and go through revisions based on that comment to make sure they're reasonable. On the other hand Coinbase wants them to be finished yesterday. So if the SEC goes through the proper process, Coinbase will complain because the new regulations are taking too long. If the SEC releases the regulations in a hurry, Coinbase will

    • Coinbase is demanding new regulations when they aren't needed. The SEC deems most crypto as securities so existing regs will do just fine. That's why they're about to lay the hammer down on Coinbase.

      • The SEC deems most crypto as securities so existing regs will do just fine. That's why they're about to lay the hammer down on Coinbase.

        Well, I can understand Coinbase's position - the SEC wants to treat them as "securities" when there's nothing remotely secure about cryptocoins.

    • > Coinbase is trying to put the SEC into an unwinnable situation.

      I think you have the picture backwards. the SEC cant "lose", coinbase cant fine or imprison the SEC. OTOH, ehe SEC sure can, and is swinging around their regulatory sword threatening action, typically multi-tens of millions of dollar fines

      And it is no idle threat. Bitfinex has eating 40+ million dollar fines, Bittrex got hit with a 30 million dollar fine that contributed to them going out of business, Binance paid untold millions in a seale

      • Coinbase, having received a direct threat from the SEC "follow the rules or else we will levy a big big fine", is asking "please tell me the rules, so I can follow them".

        The rules are well documented. Claiming that they don't apply to your business because "crypto" doesn't make it so.

  • "So, A bunch of us are inventing a whole new complex way of doing finance. Tell us right now all of the rules about how you intend to watchdog us. No, we aren't really willing to nail down exactly how we do things at this time. We're too fluid and dynamic for that. New-fangled, you know. You stodgy old types wouldn't understand. No, of course we wouldn't dream of violating the spirit of the law by trying to find the loopholes in iteration one of regulations based on incomplete understanding and uncertain re

  • "This is particularly true given the Commission's active regulatory and enforcement agenda in this area..." If you haven't made the rules yet, I would think there would be nothing to enforce.

    • That's why they want rules. They've already brought at least one enforcement action against a cryptocurrency's creator, XRP.

    • They are waiting to see who they want to go after, then they look at the product, then they make the rule, then they initiate an administrative court action for the violation.

      Besides violating the prohibition on expost-facto law, it's both administrative lawmaking and administrative courts.

      The SCOTUS ruling on the Maine fisheries /Chevron/ action should clean this up a bit.

      • Besides violating the prohibition on expost-facto law, it's both administrative lawmaking and administrative courts.

        Leaving alone any analysis of the whole ex post facto thing, are you under the impression that federal agencies are not allowed to make rules and hold hearings to enforce them? If not, I have no idea what that sentence means.

    • They have a whole slew of existing rules. Crypto peddlers just say "even though this thing we are selling matches the legal definition of a security, you should treat it differently because internet". The SEC doesn't need to make new rules every time someone comes up with a new take on the same formula.

  • deliberating over the kind of significant changes sought by Coinbase, which could affect both crypto assets and the securities markets more generally, takes time

    (emphasis added)

    Bitcoin started public use in 2009 and by 2013 it had grown enough that FINCEN, a department of the treasury, classified Casascius as a money transmitter business and shut them down.

    It's 2023; That's a very long time to sit, wait, and see.

  • They could just say, "Ponzi schemes are illegal, please stop engaging in them."
  • "Then regulate us!" "NO!!"
  • They charged Kraken millions of dollars for "violating" crypto laws that don't exist?
  • It's ridiculous to say "You can't do this, we're going to regulate it..." and then just... not regulate it.

    Then when someone asks you to do what you said, you refuse.

    So I guess crypto remains completely unregulated if they won't regulate it. Party on, cryptobros.

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