Coinbase was issued a Wells notice from the U.S. Securities and Exchange Commission on Wednesday, and executives from the company took to Twitter Spaces to discuss the decision and what Coinbase’s next steps will be to make legal frameworks for the crypto world.
“Regulators should come up with the rules, tell everybody the rules and we follow them,” CEO Brian Armstrong said during the conversation. “The current laws are not clear and we would like to get more clarity.”
Per a Coinbase SEC filing, the government agency’s staff has “advised the Company that it made a ‘preliminary determination’ to recommend that the SEC file an enforcement action against the Company alleging violations of the federal securities law.”
“I think it is easy to look at the situation right now and conclude that the SEC is trying to change the game,” Paul Grewal, chief legal officer of Coinbase, said during the Twitter chat. “What’s actually happening is the SEC is trying to cancel the game after it’s been played. And so we think it’s very important to keep a focus on what this means [longer term for Coinbase and the industry].”
In the filing on Wednesday, SEC language appeared to indicate that staking through a third-party service can run afoul of securities law.
But existing securities laws that were established roughly 90 years ago simply do not work for less intermediated digital assets that are utilizing innovative blockchain technology, said Sheila Warren, CEO of the Crypto Council for Innovation. “There are no current frameworks in the U.S., therefore, it is not possible for crypto companies to operate in the U.S. in a way that prevents them from facing regulatory repercussions,” she added.