SEC Blocks Crypto Rules, Coinbase Throws Down the Gauntlet

On Friday, Coinbase Global submitted a petition to the U.S. Securities and Exchange Commission requesting new regulations for the digital asset industry. The largest cryptocurrency exchange in the nation said that it will file a lawsuit against the decision.

The five-member panel voted 3-2 not to recommend new rules, stating that it did not agree with Coinbase's argument that the present standards are "unworkable" for the cryptocurrency industry. Later, the company informed an appeals court that it intended to request judicial review of the SEC's ruling.

This argument was only the most recent in a longer-running battle between the leading U.S. markets regulator and the cryptocurrency industry. The agency has maintained that the majority of cryptocurrency tokens are securities and fall within its purview. The government has filed lawsuits against a number of cryptocurrency businesses, including Coinbase, for listing and dealing in tokens that, in its opinion, ought to be considered securities.

Coinbase refuted such claim. Coinbase soon after informed a federal court of appeals in Philadelphia that it intended to request a review of the SEC's rejection.

The business said that the current U.S. securities laws are insufficient and pushed the SEC to develop a special set of regulations for the cryptocurrency industry in 2022. Coinbase filed an appeal with a judge in April to compel the SEC to reply to the petition.

Given that the SEC had stated it would reply to Coinbase's petition, the court ruled that it would not compel the agency to take any action.

Cryptocurrency companies have expressed a need for a more precise definition of when the SEC considers a digital asset to be a security.

Gensler said in his statement on Friday that Coinbase had conceded the SEC's jurisdiction over the cryptocurrency industry by requesting that the agency draft regulations, a claim the cryptocurrency exchange has previously denied.

Hester Peirce and Mark Uyeda, two Republican commissioners on the SEC, expressed their disagreement with the ruling in a joint statement.

Coinbase Listing Update

A couple of days ago, Coinbase has announced that it is listing Seamless (SEAM) in a new statement published via the Coinbase Assets account on social media platform X.

Built on the Coinbase-backed layer-2 scaling technology Base, the cryptocurrency project is the first "native, decentralized, non-custodial lending and borrowing protocol," according to the Seamless website.

Base is intended to give developers a low-risk, secure, and user-friendly approach to develop on-chain, according to project incubator Coinbase. The Optimism (OP) development stack powers the layer-2 network, which works with Ethereum, Ethereum layer-2s, and other EVM chains. Seamless claims that SEAM is the new governance token for the system.