On December 15, the Securities and Exchange Commission (SEC) denied a Petition for Rulemaking filed on behalf of Coinbase Global, Inc. which sought new rules for the digital asset sector. Coinbase’s Petition for Rulemaking was denied in a 3-2 vote.
SEC Chairman Gary Gensler, the two Democrat Commissioners, Caroline Crenshaw and Jaime Lizarraga, supported the proposal, while the two Republican Commissioners, Hester Peirce and Mark Uyeda, did not support the proposal.
Chairman Gary Gensler said, “I was pleased to support the Commission’s decision for three reasons. First, existing laws and regulations apply to the crypto securities markets. Second, the SEC addresses the crypto securities markets through rulemaking as well. Third, it is important to maintain Commission discretion in setting its own rulemaking priorities. The Commission has long explained that, as with any type of instrument, if a particular crypto asset is offered and sold as a security, its offer or sale requires disclosure through the registration process developed by Congress to protect investors. These disclosures and protections remain important in the context of crypto assets that are securities, as evidenced by numerous and notorious fraudulent schemes in this space. I disagree with the petition’s assertion that it is not feasible to identify an “issuer” of crypto asset securities.”
Commissioner Hester Pierce and Mark Uyeda issued a joint statement which said, “We acknowledge that the Commission has broad discretion to set the timing and priorities of its rulemaking agenda. In our view, the Petition raises issues presented by new technologies and other innovations, and addressing these important issues is a core part of being a responsible regulator. Any exploration of these issues should include public roundtables, concept releases, and requests for comment, which would afford us the opportunity to hear from a wide range of market participants and other interested parties. Then, using what has been learned, the Commission could issue guidance or engage in rulemaking as needed. The public benefits from open conversations about how new products and services can be offered within a sensible regulatory framework to meet the needs of our fellow Americans. While we are disappointed that the Commission is not hosting these important conversations, we will have an open ear for conversations that others host and the ideas that emerge from those conversations.”