Coinbase Pursues ‘Legislative Solutions’ in SEC Fight


Coinbase is reportedly not content to let its regulatory fight simply play out in court.

The cryptocurrency firm’s chief legal officer said at an investor conference Monday (June 12) that the company will also seek a legislative solution while it battles a lawsuit by the Securities and Exchange Commission (SEC).

“Even as we’re managing the litigation, we are equally eager to engage in pressing legislative solutions,” said Paul Grewal, whose comments were reported by Bloomberg News. “We think the court could and should rule that the case lacks legal merits and that will be the end of it.”

But while that case plays out, Grewal added, the company is hoping that a draft of cryptocurrency legislation will move forward in the U.S. House by summer’s end.

Earlier this month, House Republicans unveiled a bill that lays out roles for the SEC and the Commodity Futures Trading Commission (CFTC) in regulating crypto.

As PYMNTS reported, the legislation contends that current guidelines fail to safeguard consumers and hinder innovation. The bill aims to block the SEC from preventing an alternative trading system (ATS) from listing crypto securities and requires the regulator to change its rules to allow broker-dealers to custody digital assets.

The bill’s authors say these measures are designed to create a more favorable environment for market participants and promote increased efficiency in the crypto space.

The SEC last week sued Coinbase — the largest crypto exchange in the country — as part of a larger cryptocurrency crackdown that also included legal action against Binance, the largest crypto firm in the world. The commission’s suit accuses Coinbase of functioning as an unregistered exchange, brokerage and clearinghouse.

“The SEC’s central legal claim is that Coinbase has pocketed billions of dollars by collecting transaction fees from investors without the legally required disclosures and protections of securities registration — exposing its customers to risk,” PYMNTS wrote last week.

Coinbase, meanwhile, has consistently charged that the SEC has refused to provide it with a clear way to register as a compliant trading platform.

“From the point of view of Coinbase, the SEC suit has a fatal flaw — none of the digital assets under discussion represent investment contracts, even if they may be the objects of those contracts,” PYMNTS wrote.

Meanwhile, Grewal said Monday that Coinbase is still trying to secure a license to operate a derivatives market in the U.S., saying that the CFTC and National Futures Association have been “very positive and productive in reviewing our applications.”