Coinbase Chief Legal Officer Paul Grewal tweeted on March 14 that he spoke to Congress last week regarding Coinbase’s inability to register with the SEC to provide digital asset securities. Today, an amicus brief was submitted in SEC v. Wahi, detailing why the case is inappropriate and would only worsen the issue.
Last week I testified to Congress about Coinbase’s futile effort to register with the SEC so we can begin to offer digital asset securities. Today we filed an amicus brief in SEC v. Wahi that explains why this misguided suit only makes things worse. 1/5https://t.co/9iWYrWwpiI
— paulgrewal.eth (@iampaulgrewal) March 14, 2023
SEC vs. Coinbase: Cryptocurrency controversy
The SEC is reportedly accusing Coinbase, the most popular cryptocurrency exchange in the United States, of breaking the law by offering listings for securities. The exchange, however, debunks this claim, saying it does not include any listed securities.
The report says Coinbase and others are in the dark since the SEC is pursuing this matter without offering clear advice on applying federal securities laws to digital assets. Coinbase has asked the SEC for clear guidelines and advice via formal rulemaking petitions, but the Commission has yet to react. Instead of a simple settlement order, broad industry standards are needed for the enforcement case against Coinbase.
Grewal says that Coinbase has stated a desire to offer securities on its platform, but the SEC has yet to answer to the company’s 50 issues raised in a rulemaking petition filed last year. Even though it does not already offer securities, Coinbase is interested in doing so and is awaiting guidance from the SEC on how to proceed.
Legal officer’s critique: SEC needs practical solutions
The legal officer says that the Commission has emphasized activities that distort the legal meaning of an investment contract above focusing on practical and long-term remedies such as adopting guidelines or registration alternatives. “We appreciate the district court’s thoughtful examination of these matters,” Grewal said.
On the other hand, Grewal’s tweet stresses Coinbase’s emphasis on the rule of law, which the DOJ acknowledged in the case of its former employee and his collaborators. The DOJ charged them with wire fraud but not securities fraud, which is consistent with the fact that the assets in question were not securities.