Coinbase received a notice from Wells from the U.S. Securities and Exchange Commission on Wednesday and company executives took their names Twitter spaces to discuss the decision and what Coinbase’s next steps will be to create legal frameworks for the crypto world.
“Regulators have to make the rules, tell everyone the rules and we follow them,” CEO Brian Armstrong said during the call. “The current laws are not clear and we would like more clarity.”
According to a Coinbase SEC filing, government agency staff “informed the company that it has made a ‘preliminary decision’ to recommend that the SEC file an enforcement action against the company for alleged violations of the federal securities law.”
“I think it’s easy to look at the situation right now and conclude that the SEC is trying to change the game,” Coinbase chief legal officer Paul Grewal said during the Twitter chat. “What is actually happening is the SEC is trying to cancel the game after it has been played. And so we think it’s really important to stay focused on what this means [longer term for Coinbase and the industry].”
In the filing on Wednesday, SEC language appeared to indicate that staking through an outside service may violate securities laws.
But existing securities laws created about 90 years ago just don’t work for less intermediate digital assets that use innovative blockchain technology, said Sheila Warren, CEO of the Crypto Council for Innovation. “There are currently no frameworks in the US, therefore it is not possible for crypto companies to operate in the US in a way that avoids facing regulatory ramifications,” she added.