The Securities and Exchange Commission denied cryptocurrency giant Coinbase’s petition for new crypto rules, with the two Republican commissioners dissenting.
Coinbase had filed the long-shot petition last year, pushing for tailored regulations for the nascent digital asset space on the grounds that current securities laws to regulate crypto are “unworkable.” In its denial, the SEC argued that existing rules are sufficient.
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In a letter announcing the decision, the SEC said that in coming to its decision, staff were consulted and that the petition and comment letter were carefully studied.
“After such consideration, and in the exercise of its broad discretion to set its rulemaking agenda, the commission concludes that the requested rulemaking is currently unwarranted and denies the petition,” the letter reads. “The commission disagrees with the Petition’s assertion that application of existing securities statutes and regulations to crypto asset securities, issuers of those securities, and intermediaries in the trading, settlement, and custody of those securities is unworkable.”
SEC Chairman Gary Gensler has drawn the ire of crypto advocates for his handling of the digital asset space since he was sworn in 2021. The SEC has gone after crypto companies, including major ones such as Coinbase, through several lawsuits.
In a separate statement, Gensler said he agreed with the SEC's decision to deny the petition and that he is “pleased” to support the move 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 chairman said.
The two Republicans on the SEC — Hester Peirce and Mark Uyeda — pushed back on the decision. The two said in a joint statement that there should have been more public engagement from the SEC on the topic.
“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,” they said. “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.”
The Washington Examiner asked Coinbase for comment.
The SEC filed lawsuits against some of the biggest crypto companies in the world over the past few years. Among the companies that the SEC has targeted are Binance, Coinbase, and Kraken. Cryptocurrency advocates have panned the SEC as too heavy-handed or as regulating by lawsuit.
News of the denial saw the price of bitcoin, the flagship cryptocurrency, fall off a bit.
Bitcoin was trading down by about 3.3% on Friday after the news was announced. It was at about $41,900 around midday and is down about 4.4% over the past five days. Still, bitcoin prices are near the highest they have been in months.
Bitcoin is up more than 10.5% over the past month alone and has notched impressive 64% gains over the past six months. Since the start of the year, it has gone up by 152% — far outpacing traditional assets such as stocks.
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The recent growth is in part due to optimism in the crypto world that a number of applications for bitcoin ETFs will be approved by the SEC.
Most in the crypto world think that at least some of the ETF applications will get approved. Bloomberg Intelligence analysts said in a recent note that they expect the SEC to approve all of the applications.