SEC Accused of Contradiction in Coinbase Rulemaking Dispute

The SEC’s Response to Coinbase’s Rulemaking Request

John Deaton, a lawyer for XRP holders, has publicly disagreed with the SEC Chair Gary Gensler’s stance on cryptocurrencies, accusing him of ‘gaslighting’ the public. This was in response to the SEC’s rejection of Coinbase Global Inc.’s rulemaking request on the grounds of applying current securities laws to cryptocurrencies, the Commission’s engagement with crypto securities markets through rulemaking, and the importance of preserving the SEC’s discretion in establishing its rulemaking priorities.

Despite the SEC’s explanation, Deaton argued that Coinbase’s rulemaking request is based on the notion that cryptocurrencies are distinct from other assets in terms of volatility and categorization as securities under existing laws.

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SEC’s Position on Crypto

Deaton noted that the SEC Chairman’s stance on cryptocurrency had drastically changed since his congressional testimony earlier this year. During the hearing, Gary Gensler had claimed that crypto was beyond the commission’s scope due to its unique nature, creating a regulatory gap. However, Deaton argued that Coinbase’s request was based on the SEC’s perspective, as shown by prior communications. The XRP holder’s lawyer suggested that the SEC Chair’s shift in attitude was politically motivated and likely supported by Senator Elizabeth Warren.

The U.S. SEC has been sending mixed messages about its stance on the crypto space, through both the SEC Chairman’s comments and the commission’s actions. For example, despite ongoing legal disputes with Coinbase and Binance over crypto securities, the regulatory body chose not to appeal its loss against Grayscale Investments. This case involved the attempt to turn the Bitcoin Trust into an ETF.