Cryptocurrency exchanges have been at the center of a lot of the ongoing bear market in the past few weeks, with Coinbase escaping most of the worst news until today. The cryptocurrency platform now faces an SEC probe into whether the firm allowed US trading of unregistered securities. At the core of the probe will be so-called digital assets.
Bloomberg reports that the SEC has stepped up their scrutiny of Coinbase's activity since the platform expanded the token offerings available to trade. At the core of this new probe is a fundamental question about the more than 150 tokens available to trade on Coinbase's platform. If those digital assets could be classified as securities, Coinbase would need to register as an exchange with the SEC.
Coinbase issued a simple statement addressing the matter last week saying "Coinbase does not list securities. End of story." The company also issued a petition to the SEC to make better rules for cryptocurrency, which sort of highlights the strange place the decentralized finance movement finds itself in. If Coinbase thinks the SEC needs to come up with "workable rules" to govern cryptocurrency securities, just how decentralized is this financial movement?
The SEC is using a precedent formed from a 1946 US Supreme Court decision to build a framework to determine if a digital asset is a security. The agency will consider a token to be under the purview of the SEC if it involves investors committing capital to a fund or company with a motive to profit off of the organization's effort. SEC Chairman Gary Gensler has claimed multiple times that many cryptocurrencies fall under the SEC's jurisdiction, but has never explained which coins are included in that belief.
It's hard to watch the ongoing crypto winter and not point and laugh, but there are many people whose investments are trapped at various insolvent entities right now. The future of a decentralized finance world that many crypto owners believe in could come crumbling down just as fast as these various tokens gained value during the bubble run of 2021. As for now, it is hard to not see the irony of these crypto platforms asking the SEC for guidance as the market crash continues.
Asif Khan posted a new article, SEC probes Coinbase (COIN) over US digital asset trading
a whole sector of scammers
Man I wonder how long they've been waiting on this one. Hard to take out a public company when they were riding high I imagine.