Coinbase Requests Clarification from SEC Amid Increased Scrutiny of Crypto Industry
The cryptocurrency sector in the United States has been facing continuous examination from the Securities and Exchange Commission (SEC). Many experts argue that the industry’s growth is being hindered by the lack of clear regulations.
As part of the SEC’s crackdown on cryptocurrency exchanges, Coinbase has found itself becoming a target of the regulatory body.
Coinbase Takes Action Against Regulatory Pressures
To address the uncertainty prevailing in the industry, Coinbase has decided to take an active approach by submitting two new Freedom of Information Act (FOIA) requests.
Through these requests, the exchange aims to understand the SEC’s stance on regulating cryptocurrencies and to seek clarity on the regulatory landscape for crypto assets, which remains a contentious issue among industry participants.
Providing more insight into the situation, Coinbase’s Chief Legal Officer (CLO), Paul Grewal, shared important details regarding the requests and emphasized,
“We have filed two new sets of FOIA requests as part of our ongoing efforts to gain clarity on how regulatory agencies are approaching digital assets. In essence, as long as the government remains resolute, so will @coinbase.”
Grewal elaborated that the first FOIA request is focused on obtaining documents related to a deposit cap on digital assets imposed by banking regulators, including the Federal Deposit Insurance Corporation (FDIC).
Additional Requests for Clarity
The second request aims to access records that detail how these agencies handle other FOIA submissions.
Furthermore, Grewal clarified that these new filings are separate from the FOIA requests that Coinbase submitted over a year ago, which subsequently led to federal lawsuits.
Recent reports suggest that the Federal Deposit Insurance Corporation (FDIC), the agency responsible for insuring bank deposits in the U.S., has directed banks to cap deposits from cryptocurrency firms at 15% of their total deposits.
This move has sparked controversy as the FDIC allegedly implemented the cap without seeking public feedback, a customary step required by U.S. law for banking regulators ahead of such decisions.
SEC’s Broadening Scrutiny of Crypto Industry
It’s not surprising that Coinbase is not the sole crypto entity facing scrutiny from the SEC.
Ripple Labs, too, has been subject to heightened investigation, with the SEC recently submitting a ‘Civil Appeal Pre-Argument Statement’ (Form C), indicating its plan to challenge a prior court ruling in their ongoing legal dispute.
The legal battle between Ripple Labs and the SEC, which originated in 2020, has generated considerable attention and debate regarding the regulatory classification of XRP and other digital assets.
Despite the tightened regulatory environment, Bitwise’s Chief Investment Officer (CIO), Matt Hougan, expressed that Coinbase seems to benefit the most from the increased enforcement actions taken by U.S. authorities in the crypto industry.
“The stringent regulatory landscape is creating a protective barrier for Coinbase’s operations, enabling them to maintain substantial profits and allowing them to excel in the short run.”