Coinbase doesn’t checklist securities. End of story.

By Paul Grewal, Chief Legal Officer

T;Dr: Coinbase doesn’t checklist securities on its platform. Period.

We have stated it earlier than, however given right now’s occasions, it bears repeating.

Earlier right now, following a Department of Justice (DOJ) investigation right into a former Coinbase worker’s misuse of confidential Coinbase info associated to itemizing choices, the Securities and Exchange Commission (SEC) individually filed securities fraud costs in opposition to this particular person associated to this wrongdoing. The SEC alleges that 9 digital property concerned are securities. The DOJ reviewed the identical info and selected to not file securities fraud costs in opposition to these concerned. As CFTC Commissioner Caroline Pham said, that is “a striking example of ‘regulation by enforcement’” by the SEC.

We agree with Commissioner Pham and, respectfully, 100% disagree with the SEC’s determination to file these securities fraud costs and the substance of the costs themselves. Let me clarify why.

Seven of the 9 property included within the SEC’s costs are listed on Coinbase’s platform. None of those property are securities. Coinbase has a rigorous course of to investigate and assessment every digital asset earlier than making it accessible on our change — a course of that the SEC itself has reviewed. This course of contains an evaluation of whether or not the asset could possibly be thought-about to be a security, and in addition considers regulatory compliance and information security points of the asset. To be specific, nearly all of property that we assessment should not in the end listed on Coinbase.

We cooperated with the SEC’s investigation into the wrongdoing charged by the DOJ right now. But as a substitute of getting a dialogue with us concerning the seven property on our platform, the SEC jumped on to litigation. The SEC’s costs put a highlight on an essential downside: the US doesn’t have a transparent or workable regulatory framework for digital asset securities. And as a substitute of crafting tailor-made guidelines in an inclusive and clear approach, the SEC is counting on these kinds of one-off enforcement actions to attempt to convey all digital property into its jurisdiction, even these property which might be not securities.

Just this morning (and with no prior data of the timing of the costs mentioned), Coinbase filed a petition for rule making with the SEC calling for precise rule making so the crypto securities market has an opportunity to develop. We fear that right now’s costs recommend the SEC has little curiosity on this most elementary position of regulators.

But within the absence of a concrete digital asset securities regulatory framework from the SEC, we stay assured that Coinbase’s rigorous assessment course of retains securities off Coinbase’s platform. We stay desirous to share our perspective with the SEC, particularly by a proper rule-making course of desperately wanted.


Coinbase does not list securities. End of story. was initially printed in The Coinbase Blog on Medium, the place individuals are persevering with the dialog by highlighting and responding to this story.

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