Coinbase to pitch regulatory framework to US authorities
Coinbase, one of the largest crypto exchanges in the world based out of the US, is reportedly preparing to pitch a regulatory framework addressed to the Government officials in the coming days.
It is expected that this would be rolled out publicly in the coming days though no details of it have been revealed so far and a spokesperson of the company also refused to comment on the same, as reported by Coindesk. This comes in the backdrop of the SEC threatening to sue the exchange if it went ahead with its plans to introduce its Lend product. This threat had forced the exchange to backtrack on those plans as it thought it would be better to stir the hornet’s nest at this point. But it doesn’t seem to have dropped the idea altogether as yet.
The main complaint against the lending product was that it constituted security and it violated the laws that governed securities. For this, 2 Supreme court precedents were cited which are the Howey and Reves cases. The regulator was reportedly comparing the lending product to stocks or certificates of interest which constitute a security. This is the basis not only for this product but for all arguments that the SEC seems to have against the crypto ecosystem.
The SEC views most of the cryptocurrencies as securities and hence violate such laws while the critics say that most of the cryptos and related product do not belong to this category. Coinbase had undertaken a similar effort in 2019 where it ranked specific cryptos as likely being considered as securities as it has realized that the SEC needs to change its stance for the crypto ecosystem to further its growth in the US but so far, the SEC does not seem to have budged from its stance.
On the other hand, Coinbase has proceeded with applying for an NFA license which would give it the ability to launch crypto derivatives as it continues to be at loggerheads with the SEC over its new products. Coinbase would not want to rub the regulators in the wrong way and the best example for that is Binance which has been struggling with regulations and compliance over the last few months which has hit its business badly during this period.