Coinbase (NASDAQ:COIN) is reporting that the Securities and Exchange Commission (SEC) is poised to drop all charges leveled at the digital asset platform, contingent upon the approval of a majority of Commissioners. As Republicans now control the Commission, this should be little more than a formality.
In a blog post, Coinbase stated, “SEC staff has agreed in principle to dismiss its unlawful enforcement case.” Coinbase called the potential dismissal a clear vindication of their position.
The company slammed the SEC as a “rogue regulator” that weaponized the lack of clarity provided by the agency. During the last four years, the SEC avoided providing regulatory clarity for digital assets, instead choosing to regulate by enforcement, a myopic approach by a federal agency that did not want to do its job.
To quote Coinbase:
“To ensure innovation continues in America and a rogue regulator cannot weaponize the lack of clarity again, it is critical that we pass legislation which provides the long-term certainty needed for the US to lead in this industry. Clarity will bring new inflows of capital into the US, update our financial system so consumers pay lower fees, and help create economic freedom for all.
We believe we will eventually get to a point where the majority of global GDP runs on crypto rails. The key question is whether America will seize the opportunity to build this infrastructure, or be left behind. Today, we helped the US take a major step toward building this industry onshore. We must enable entrepreneurs, builders, and innovators to update our financial system and bring the world onchain.”
Coinbase became a public company in 2021, the first and only crypto exchange in the US to accomplish this task. To become a public firm is a rigorous process with great scrutiny applied by the SEC; therefore, it was ironic when the SEC apparently changed its mind about the company’s business.
Coinbase was approved to become a public company during Trump’s first term as president. When Joe Biden took over, and former SEC Chair Gary Gensler took over the SEC, policies on digital assets suffered from a complete reversal in approach. This regulatory whiplash harmed Coinbase and many other firms. With Trump back in the White House and new leadership at the SEC, Fintech innovators should finally gain greater clarity, which is all they wanted from day one.
While it is unfortunate the last four years were difficult for the digital asset sector, and Gensler’s tenure at the SEC will be known as anchored on the wrong side of history; the US is finally positioned to benefit from new distributed ledger technology that can improve markets, reduce inefficiencies, and, perhaps, deliver a new era of novel assets to the masses.
