Paul Grewal, the legal director of US-based cryptocurrency company Coinbase, has opposed a proposed rule change from the Securities and Exchange Commission (SEC) that could change the definition of an exchange and the regulation of digital assets. .
In a Twitter thread posted on June 14, Grewal he claimed that the SEC’s proposal “attempts to fit a square peg into a round hole” and is “too flawed in process and substance to proceed.” He was referring to the SEC’s extension of the comment period for a proposed amendment to the Securities Exchange Act of 1934, which would make securities laws apply to decentralized exchanges in the same way that they apply currently to stock exchanges.
“Requiring a DEX to register in the same way as a national stock exchange is impossible,” Grewal said. “Demanding the impossible violates the [Ley de Procedimiento Administrativo]. And simply saying that there is no economic data does not exempt the SEC from conducting economic analysis, especially when such data exists.”
And added:
“The SEC is attempting to preempt congressional action by baking unsubstantiated assumptions about its jurisdiction over cryptocurrency into proposed rules.”
Some US lawmakers and cryptocurrency advocacy groups, including the Blockchain Association, have also criticized the SEC’s proposal, claiming the rule change would allow the commission to exceed its authority and expand its scope to a range of unequipped financial products. to handle such regulatory requirements. According to Coinbase’s CLO, there was a way forward with the proposed rule change, which required “a robust consideration of the profound differences between a DEX and a traditional exchange.”
Yesterday we filed a comment letter on the @SECGov proposed rule that seeks to expand the definition of exchange to include DEXs. tl; dr: this proposal should NOT be adopted, and certainly not before completing the threshold steps for any rulemaking. 11/1 https://t.co/fBXAYiWb4W
— paulgrewal.eth (@iampaulgrewal) June 14, 2023
Coinbase’s comments came at a time when the SEC is in the spotlight in the United States regarding the regulation of cryptocurrency. The commission has filed separate lawsuits against Binance and Coinbase for alleged violations of securities laws, prompting a backlash from lawmakers calling for the removal of SEC Chairman Gary Gensler.
Prior to the SEC’s lawsuit, but following a notice from Wells suggesting possible enforcement action, Coinbase filed a response in support of its July 2022 petition for an injunction in an attempt to force the commission to provide clarity. regulations to companies wishing to register. As of June 13, the SEC was awaiting the results of an appeal filed in federal court seeking 120 days to respond to Coinbase’s request.
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