Coinbase CLO Exposes SEC Double Standards on Crypto Rules

Coinbase Chief Authorized Officer Paul Grewal has expressed concern over the US Securities and Trade Fee’s (SEC) inconsistent stance on crypto classification. Grewal pointed to what he described as double requirements in the way in which the SEC has argued in a number of lawsuits whether or not crypto property ought to be categorized as securities.

Coinbase CLO on SEC’s crypto classification fiasco

In a current tweet, Grewal referenced the SEC’s arguments within the LEJILEX case, highlighting a particular contradiction. In response to the response temporary filed on Wednesday, October 2, the SEC argued that “whether or not a digital asset transaction is a securities transaction will not be decided by the character of the asset.”

Nonetheless, Grewal claims that the SEC has taken a contradictory place in Coinbase’s ongoing case. The company informed the courtroom that “crypto property are totally different from the tangible property being bought [real estate] instances” and are due to this fact extra more likely to be thought to be results.

“That is our authorities appearing on behalf of all of us. Telling one decide one factor and one other the alternative shouldn’t be tolerated. We deserve higher,” Grewal lamented.

Yesterday, @SECGov filed a response temporary within the @LEJILEX case arguing that “whether or not a digital asset transaction is a securities transaction will not be decided by the character of the asset.” It’s notable as a result of in our case they argued precisely the alternative of Choose Failla. 1/3

— paulgrewal.eth (@iampaulgrewal) October 3, 2024

Moreover, the inconsistency within the SEC’s place might have important implications for the broader crypto market, particularly as regulatory scrutiny continues to accentuate. Because the Coinbase CLO notes, it’s not only a technical challenge, however one which raises questions on equity and transparency within the regulatory course of.

The Ripple enchantment

On Wednesday, the SEC additionally took a big authorized step within the case towards Ripple, submitting an enchantment towards Choose Analisa Torres’ July 2023 ruling that had categorized XRP, Ripple’s native digital token, as a non- safety asset when bought to personal buyers.

Nonetheless, the decide had fined Ripple $125 million for promoting XRP to institutional buyers, classifying these transactions as securities gross sales. With the SEC’s enchantment, the case stays unresolved. The regulator is now difficult the courtroom’s choice and looking for to overturn the ruling in favor of XRP and reassert its authority over the classification of digital property.

This transfer additionally drew backlash from Coinbase CLO Grewal. In response to Ripple CLO Stuart Alderoty’s publish in regards to the enchantment, Grewal wrote: “If the legislation is as clear as SEC at all times claims, why ask an appeals courtroom to make clear issues? However okay, let’s get Second Circuit to verify as soon as and for all that token transactions on secondary markets are NOT funding contacts.”