US Chamber of Commerce blasts SEC's approach to ether, Coinbase

The U.S. Chamber of Commerce, one of the most influential business advocacy groups in the country, is taking up the banner of digital asset critics of U.S. regulation, and blasting the Securities and Exchange Commission's approach to ether, Coinbase, Kraken and the broader digital asset industry. 

The association lent its support to Coinbase’s lawsuit against the SEC for a response to a request for crypto-specific rulemaking. 

Coinbase filed a rare writ of mandamus lawsuit against the SEC last month following up on a request made last summer for new rulemaking specific to digital assets. 

In its own filing to the court in support of that suit, the Chamber argues that the lack of direct response from the SEC to Coinbase’s request “is causing substantial economic harm to both Coinbase and the broader business community.” 

The Chamber also criticizes the commission’s enforcement action against Kraken’s staking-as-a-service business. The company settled and ended that business line in the U.S., but the Chamber criticized the action as emblematic of an aggressive SEC enforcement stance that could force more digital asset companies to end offerings in the U.S. 

Ether-eal ambiguity

The business group also blasts the uncertainty around ether, the second-largest cryptocurrency by market capitalization, and the major area around digital assets where SEC Chair Gary Gensler has taken a different tack from his predecessor, Jay Clayton. Under Clayton the SEC took a stance that ether may be sufficiently decentralized as to no longer be a financial security, whereas Gensler has strongly indicated otherwise while declining to explicitly express his opinion one way or the other in a recent congressional appearance. 

“Ether has been around for almost a decade, has a market capitalization exceeding $220 billion, and is a fundamental building block in the industry,” the Chamber’s brief reads. “Yet despite the ubiquity of ether, regulators still cannot agree on what it is.” 

The brief notes the shift in tone around ether from the SEC, the agency’s disagreement with the CFTC over the digital asset, and Gensler’s recent ambiguity before Congress and to reporters afterwards over whether ether is a security or not. 

The amicus brief filed earlier this week also piggybacks on one of the arguments the crypto trading platform makes in its own suit, that the SEC has already made up its mind on whether or not to issue a rule but declined to formally respond to the request, due to public statements by Gensler that current financial markets laws are enough to regulate digital assets. 

Coinbase could challenge the agency’s decision in court, though that would likely be a lengthy process. But the company chose to gamble with the preemptive lawsuit against the SEC now, and fight on its own terms, rather than wait on whether an investigation into several of its business lines would result in an enforcement action.