Paul Grewal, the chief legal officer of Coinbase, an American cryptocurrency company, has opposed a suggested amendment from the Securities and Exchange Commission (SEC) that could alter the definition of an exchange and the regulation of digital assets.
In a June 14 Twitter thread, Grewal expressed his opinion that the SEC proposal was “too flawed in process and substance” to be viable, as it was attempting to “fit a square peg in a round hole”. He was referring to the SEC’s attempt to extend the comment period for a proposed rule change in the Securities Exchange Act of 1934, which would have meant that securities laws would have been applied to decentralized exchanges in the same way they are currently applied to securities exchanges.
“Grewal declared that mandating a DEX to register in a similar fashion to a national securities exchange is impossible, and that demanding the unachievable would be in contravention of the Administrative Procedure Act,” he said. “Moreover, the lack of economic data does not excuse the SEC from performing economic analysis, especially when the data is available.”
He stated additionally.
Several U.S. legislators and crypto advocacy organizations, such as the Blockchain Association, have criticized the SEC proposal, asserting that it would enable the commission to exceed its power and broaden its scope to a selection of financial items that are not fit to manage such regulatory conditions. As per the Coinbase CLO, there was a way ahead with the proposed rule alteration, necessitating “thorough contemplation of the immense contrasts between a DEX and a conventional exchange”.
Paradigm criticizes the SEC’s “illogical” effort to regulate decentralized exchanges.
The SEC has been in the spotlight in the United States with regards to the regulation of cryptocurrency, and Coinbase’s remarks were made in this context. The Commission has brought separate legal actions against Coinbase and Binance for purported breaches of securities legislation, leading to outcries from legislators demanding the ousting of SEC chair Gary Gensler.
Following a Wells notice that indicated a possible enforcement action, Coinbase submitted a reply in support of its July 2022 petition for a writ of mandamus in an effort to obtain regulatory clarity for organizations wishing to register. On June 13, the SEC was waiting for the outcome of an appeal to the federal court that asked for 120 days to answer Coinbase’s appeal.
Does SEC Chair Gary Gensler have the ultimate authority when it comes to crypto regulations?
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