Coinbase’s top lawyer chided the Securities and Exchange Commission in congressional testimony, as he testified before a House of Representatives committee currently drafting legislation to create a new framework for digital asset markets in the U.S.
“It’s disappointing, but not surprising, that the SEC has decided to bring legal action against Coinbase today, the day of our testimony before this committee’s critical hearing on creating a workable framework for digital asset regulation,” said Coinbase Chief Legal Officer Paul Grewal, hours after the SEC sued his company over alleged securities law violations. “The solution is legislation that allows fair rules for the road be developed transparently and applied equally, not litigation.”
Added Grewal: “Despite today’s complaint we will continue to operate our business as usual.”
The SEC has accused Coinbase of willfully violating securities laws by listing unregistered securities and offering its staking program.
The civil complaint includes a reference to the SEC’s report on the original Decentralized Autonomous Organization, issued in 2017, which warned that crypto tokens and other digital assets could meet the definition of securities under U.S. law, and would likely require the same sort of registration and disclosures as stocks and bonds.
But the SEC also argues that Coinbase used to hold the same position the agency does, even before that report was issued.
The SEC also notes that Coinbase published its own document on securities law and cryptocurrencies in December 2016, indicating that for most tokens, parts of the Howey test, a legal precedent used in the U.S. to determine if an asset is a security investment, “are likely to be met."
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