The SEC rejected the legal request made by Coinbase

The Securities and Exchange Commission (SEC) has denied a rulemaking petition filed by Coinbase. SEC Chairman Gary Gensler says existing rules are adequate to protect investors. Commissioners Hester Pearce and Mark Uyeda released statements disagreeing with the commission's decision.

The Securities and Exchange Commission (SEC) has rejected a crypto rulemaking petition filed by US-based crypto exchange Coinbase.

SEC Chairman Gary Gensler said in a statement published Friday that he supports the commission's decision. He cites three reasons for his view on the agency's recent approach to efforts to achieve clear regulatory rules.

“I am pleased to support the commission's decision for three reasons,” Gensler said.

“First, existing laws and regulations apply to crypto securities markets. Second, the SEC also oversees the regulation of crypto securities markets. Thirdly, it is important to protect the commission's decision.

Gensler said existing laws apply to crypto.

The SEC chairman's comments follow recent enforcement actions and security breaches against major crypto companies and players, on the back of the government agency's opposition to redrafted crypto regulations.

These include Coinbase, Binance and Kraken and others.

Meanwhile, the industry, following the failure of the crypto exchange FTX, accused the SEC of not doing anything to protect investors when dealing with exchanges. But Gensler says the existing rules are adequate for the protection of investors and industry players.

Nothing about the crypto securities markets suggests that investors and issuers are less worthy of the protection of our securities laws. Congress in the year In 1933 or 1934 he said that securities laws only applied to stocks and bonds. Instead, Congress included a long list of 30-plus items in the definition of securities, including the term “investment contract,” the SEC chairman noted.

Gensler maintains that most crypto assets are investment contracts and therefore subject to federal securities laws. This year, a US court declared that XRP, which the Commission had alleged was a security, was not. But despite the legal loss against Ripple, subsequent lawsuits by the watchdog listed many tokens as unregistered securities.

Noting that the SEC's rulemaking applies to crypto securities, Gensler said in Coinbase's statement that “now is the right time” to change the rule.

According to the SEC Chairman, there are many crypto-related cases and operations underway and the results of these will inform whether or not changes to the regulatory system are needed.

In a separate statement, SEC Commissioners Hester Peirce and Mark Uyeda said they “disagree with the commission's decision.”

Commissioner Uyeda and I responded to today's denial of Coinbase's rulemaking petition:

— Hester Peirce (@HesterPeirce) December 15, 2023

The two commissioners noted that the petition raises key issues related to new technologies and that addressing them is “an integral part of being a responsible regulator.”