Here’s how the industry wants it

If the US Securities and Exchange Commission (SEC) Wells Notice against Coinbase makes anything clear, it’s that the agency is at war with the crypto industry. Coinbase is the poster child of the US crypto industry and has always been committed to regulatory compliance and license registration – otherwise the exchange would not have been able to get its IPO approved either.

Nevertheless, the SEC decided to send a Wells Notice to Coinbase focusing on stakes and asset listings. A Wells Notice usually precedes an enforcement action, CEO Brian Armston said.

Indeed as Coinbase CLO Paul Grewal wrote via Twitter, the exchange has met with the SEC more than 30 times in the past nine months to find a way to register — without hearing back. When Coinbase applied to go public in 2021, the SEC granted approval. “Now they’ve changed their minds about what’s allowed,” Grewal said.

A War on Crypto and How the Industry Will Win

In a blog post, Coinbase described what’s most shocking about the well notice, “SEC staff told us that they have identified potential violations of securities law, but little more. We asked the SEC to specifically identify which assets on our platforms they believe may be securities, and they refused to do so.”

The crypto community is outraged at how the SEC refuses to do its job by not creating clear rules while regulating with enforcement actions. Therefore, it seems clear: the war can only be won in court.

Fortunately, Coinbase is more than eager to fight. “So what happens next? We are using the legal system to finally start to get some clarity for the crypto industry in the US. Ironically, establishing some case law may be our best chance to get the regulatory clarity that the industry deserves,” Grewal explained.

Jake Chervinsky, Chief Policy Officer of the Blockchain Association, expressed his dismay at the Wells Notice to Coinbase after the company spent an “extraordinary amount” of time and resources working in good faith to gain regulatory clarity from the SEC. Nevertheless, Chervinsky is hopeful:

Fortunately, Coinbase is ready to fight and in a strong position to do so successfully as a matter of law. Remember, the SEC does not make the law. It only makes allegations, which must ultimately be tested in the courts. Often, like here, the SEC gets it wrong.

Other well-known bigwigs in the crypto industry have a similar view. Scott Melker, The Wolf Of All Streets, claims via Twitter that Coinbase will bury the SEC in court as they have the crusaders and facts on their side. Melker writes:

The legal system has pounded on the SEC in every situation available. Let’s go. […] This will catalyze the industry in the US in a way that the SEC is wildly unprepared for. Gary is toast.

Caitlin Long, founder and CEO of crypto-friendly Custodia Bank, add:

IT SHOULD BE CRYSTAL CLEAR BY NOW that the Biden administration wants all crypto (even the legitimate parts of it) – driven out of the US […] The SEC’s mission is investor protection. How did allowing a company to go public if it violated securities laws protect investors?

XRP community attorney Jeremy Hogan also notes that the SEC is no longer an independent agency that makes rules based on the law, but is a “political enforcement arm of the government and its views,” adding, “Only the courts can save us now.”

Author Andrew Samuel expressed his optimism too:

Reminder: A couple of weeks ago, the SEC was picked apart by Grayscale lawyers and a DC Circuit appellate panel. You can bet that Coinbase is set to do the same in the coming months/years. These two firms, whatever you think of them, are now the torchbearers to stop crypto death in the US.

At press time, Bitcoin was trading at $27,630, digesting yesterday’s news.

Featured image from iStock, chart from TradingView