On Dec. 15, the U.S. Securities and Exchange Commission (SEC) denied a petition from the cryptocurrency exchange Coinbase, which had requested the development of new rules for digital asset securities
In a response letter to Coinbase, the SEC said it “concludes that the requested rulemaking is currently unwarranted and denies the Petition.” The decision comes after nearly 18 months of back-and-forth between Coinbase and the securities regulator.
Coinbase originally petitioned the SEC in July 2022, asking the agency to create a “new regulatory framework” for crypto asset securities through its formal rulemaking process. The exchange argued existing SEC rules are “both incomplete and unsuitable” for digital asset securities that operate on blockchain technology.
‘Crypto asset securities’
But in its denial letter, the SEC said it “disagrees with the Petition’s assertion that application of existing securities statutes and regulations to crypto asset securities…is unworkable.
The rejection of a specialized crypto framework aligns with SEC Chair Gary Gensler‘s consistent view that most crypto assets fall under long-established investor protection rules, which he has repeatedly emphasized.
The agency said it currently has no plans to undertake the “discretionary rulemaking of substantial scope to create a ‘new regulatory framework’ for crypto asset securities,” as the original petition. It cited other ongoing SEC initiatives that may inform whether future rule changes are warranted, writing:
“Moreover, the Commission has discretion to determine the timing and priorities of its regulatory agenda, including with respect to discretionary rulemaking such as that requested in the Petition.”
Before the SEC outright rejected its rulemaking petition on Thursday, Coinbase had taken legal action against the securities regulator, aiming to force a response. In April 2023, the exchange filed a lawsuit to compel the SEC to officially accept or reject a petition originally submitted in July 2022. As of today’s development, that petition has been answered.
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