The United States Securities and Exchange Commission (SEC) is currently in a lawsuit with Ripple Lab, regarding what it says are illegal sales of unregistered securities. The company has been making such sales to investors without registering them as securities.
In another case, Kraken, a popular crypto exchange, came under the commission’s radar concerning selling unregistered investment products. While the SEC has not yet taken any legal action against Kraken, it has made it clear that it is watching the exchange closely.
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Coinbase Challenges U.S. SEC Statement
The head legal officer at Coinbase, Paul Grewal, stated on March 21 that the company had sent a letter to the United States SEC. The exchange aims to know the SEC’s stance on cryptocurrency securities regulation.
Coinbase noted that core staking services are not securities but different software services it offers. According to Grewal, paying a fee to someone doesn’t make the transaction secure.
He further stated that the SEC’s declaration that staking-as-a-service is security doesn’t align with the company’s view and it is seeking clarity on the matter.
Meanwhile, the crypto community is eagerly awaiting the outcome of Coinbase’s dispute with the SEC. This could have a major impact on the industry as a whole, as the SEC tries to place its stamp of approval on new technologies like staking. As such, the exchange is demanding that the SEC admit that core staking services are not securities.
Previous Dispute Between Coinbase And SEC
The dispute between the SEC and the crypto exchange has long been ongoing. In a blog post responding to the SEC securities ruling, Coinbase stated that its Lend program is not an investment contract or security. The Lend program typically allows users to earn interest on certain assets held on the platform. Coinbase further stated that Lend is merely a product offered to eligible customers and is not a security because it involves no investment of money and no common enterprise.
The SEC had stated that the Lend program was a security and that Coinbase was in violation of securities law. In its blog post, Coinbase outlined its reasons for disagreeing with the SEC and explained how the Lend program does not meet the definition of a security. Coinbase also stated that it is working with the SEC to ensure that its Lend program is in compliance with securities law.