Coinbase, a prominent American crypto trading platform, has filed a statement with the U.S. Securities and Exchange Commission (SEC). The statement challenges the Commission’s “sweeping” definition of digital assets as a security. Coinbase and several other crypto businesses, including Stably and Bitwise Asset Management, argued that this broad definition and its “in three ways: (1) misinterpret the law, (2) would require hundreds of thousands of businesses to register as broker-dealers, and (3) would ‘chill’ the adoption of digital assets and technologies that underpin them.”
The statement centers around a definition of “digital asset” within the SEC’s Regulatory Safe Harbor proposal. The proposal gives the Commission the power to create a standard that businesses in the crypto industry must adhere to when attempting to register digital assets as securities. If adopted, a digital asset could only be registered as a security if it meets the criteria of the framework. Coinbase and the other companies argued that this definition is inconsistent with applicable federal laws and regulations and is overly broad.
Coinbase and the others noted their view that many digital assets, like Bitcoin, “are simply not ‘investment contracts’” and thus cannot be subject to registration as a security. The companies strongly argued that imprecise definitions can be damaging to innovation and that the SEC should “refrain from overregulating the individuals and companies that are utilizing new technology” in the crypto space. Despite this effort, the fate of the SEC’s definition and how it ultimately impacts Coinbase and companies like it remains to be seen.
