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Coinbase’s Struggle with Securities Regulation

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Coinbases Struggle with Securities Regulation

On March 14, Paul Grewal, chief legal officer of Coinbase, tweeted: “Coinbase has no online securities, but we want to go online. Last year, we even requested the United States Securities and Exchange Commission (SEC) We began to formulate rules on this issue and put forward 50 questions, but we did not receive any reply. Instead of focusing on practical and durable solutions such as rulemaking or registration options, regulators have given priority to such actions that distort the legal definition of investment contracts beyond recognition. The rule of law is very important. The Ministry of Justice admitted this when accusing our former employees and their associates of wire transfer fraud rather than securities fraud. This is reasonable. The reason is simple. The assets involved are not securities. “

Financial officer of Coinbase: The regulatory authority did not focus on practical and durable solutions such as rulemaking or registration options

Analysis based on this information:


In March 2021, Coinbase’s Chief Legal Officer, Paul Grewal, expressed his frustration with the lack of clarity from the United States Securities and Exchange Commission (SEC) regarding online securities. While Coinbase currently has no online securities, the company has expressed a desire to explore the possibilities of such offerings. Unfortunately, the SEC has failed to provide clear rules or guidance for companies like Coinbase, leaving them uncertain how to proceed.

Grewal’s tweet highlights the fact that Coinbase had submitted 50 questions to the SEC last year in an attempt to get the ball rolling on this issue, but received no reply. This lack of response is disheartening, considering that regulation would be beneficial for both Coinbase and its potential customers. Without regulation, it is unclear what legal safeguards will be put in place to protect investors who wish to invest in online securities.

One central issue that Grewal appears to take issue with is the SEC’s apparent focus on actions that “distort the legal definition of investment contracts.” This language seems to indicate that the SEC is intentionally creating confusion around what constitutes an investment contract, possibly as a means of regulating online securities without actually addressing the issue head-on. Coinbase appears to believe that this approach will only lead to more problems down the road and is pushing for clear, practical solutions that can provide long-term protections for both investors and companies.

A related concern is the focus on wire transfer fraud over securities fraud in cases involving cryptocurrency. Grewal points out that this approach makes sense in cases where the assets involved are not securities. However, given the lack of clear definitions around what constitutes a security when it comes to cryptocurrency, the situation is far from straightforward. This ambiguity only underscores the need for clear regulation and guidelines from the SEC.

In conclusion, Coinbase’s struggle with online securities regulation is an ongoing issue that highlights the need for clear, practical guidelines from the SEC. Grewal’s frustration with the lack of response to Coinbase’s questions indicates that the SEC is not taking this issue seriously enough. Ultimately, both companies and investors stand to benefit from clear guidelines that can provide long-term protections in the rapidly evolving world of cryptocurrency.

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