Key Takeaways
- The Securities and Exchange Commission announced that nine of the cryptocurrencies listed on Coinbase were securities.
- Coinbase, other regulators, and crypto lawyers were among those criticizing the agency for its continuous lack of regulatory clarity regarding the cryptocurrency space.
- The regulatory body was blasted by Congressman Tom Emmer (R-MN) two days ago for âusing enforcement to expand its jurisdiction.â
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The Securities and Exchange Commission declared today in a court filing that nine tokens listed on Coinbase were securities, prompting strong criticisms from the crypto industry over the agencyâs regulatory approach.
âRegulation by Enforcementâ
The SEC is drawing the ire of observers.
In a complaint filed today in an insider trading scheme case involving a former Coinbase employee and two co-conspirators, the Securities and Exchange Commission (SEC) announced that âat leastâ nine of the cryptocurrencies listed on Coinbase were securities. The crypto industry was prompt to criticize the filing as a flagrant example of âregulation by enforcement.â
The tokens categorized as securities in the complaint were Flexaâs AMP, Rallyâs RLY, DerivaDEXâs DDX, XY Labsâ XYO, Rari Capitalâs RGT, the Liechtenstein Cryptoassets Exchangeâs LCX, Powerâs POWR, DFX Financeâs DFX, and Kromatika Financeâs KROM. All of these tokens are issued on the Ethereum blockchain.
The filing marks one of the few instances where specific crypto coins were deemed to be securities by the agency. The SEC has refused in the past to clarify many cryptocurrenciesâ regulatory status while continuously arguing that crypto tokens need to be brought under the purview of securities regulations.
Coinbase responded to the SECâs complaint with a blog post petitioning it to create a regulatory framework for cryptocurrencies âguided by formal procedures and a public notice-and-comment process, rather than through arbitrary enforcement or guidance developed behind closed doors.â
Commodities Futures Trading Commission (CFTC) commissioner Caroline Pham was equally critical of the SEC in a letter posted on Twitter. âThe case SEC v. Wahi is a striking example of âregulation by enforcementâ,â Pham wrote before claiming the SECâs claims could have âbroad implicationsâ beyond the case itself.Â
Her sentiment was echoed by Blockchain Association policy head Jake Chervinsky, who stated the case was a âmessâ that would likely require ânine mini-trialsâ to determine if each token cited in the filing really was a security.
Only two days ago, Rep. Tom Emmer (R-MN) slammed the SEC in a congressional hearing for âusing enforcement to expand its jurisdiction,â calling the agency âpower-hungryâ and âhellbentâ on achieving its political goals at the expense of the crypto industry.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.Â