Chamber Of Commerce Backs Coinbase — Crypto Revolution Or Regulatory Disaster?

Raising concerns over the Securities and Exchange Commission's (SEC) handling of the digital asset landscape, the U.S. Chamber of Commerce, a major business interest group, is voicing criticism on behalf of digital asset detractors.

The regulatory approach towards entities like Coinbase Global Inc COIN, and Kraken is on the firing line.

The business group has publicly backed Coinbase in its legal tussle with the SEC concerning a request for rules specific to cryptocurrencies, The Block reported.

In an unusual legal move, Coinbase filed a writ of mandamus lawsuit against the SEC last month.

This action was a follow-up to a call made in the previous summer for the introduction of digital asset-specific rules. In its court submission supporting Coinbase's suit, the Chamber stated that the SEC's non-responsiveness to Coinbase's appeal "is causing significant financial harm to both Coinbase and the wider business community."

The Chamber has also taken issue with the SEC's enforcement action against Kraken's staking-as-a-service venture. Despite Kraken reaching a settlement and subsequently discontinuing this service within the U.S., the Chamber identifies this as symptomatic of an aggressive SEC enforcement strategy that might push more digital asset enterprises to stop their U.S. services.

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The group has also expressed frustration over the lack of clarity surrounding Ether ETH/USD, the second-largest cryptocurrency by market value.

The SEC Chair Gary Gensler's approach to Ether contrasts with that of his predecessor, Jay Clayton, and this has increased the uncertainty.

While the SEC under Clayton suggested that Ether might be so decentralized as to no longer qualify as a financial security, Gensler has indicated otherwise, although he stopped short of giving a clear opinion during a recent congressional appearance.

The Chamber's filing states, "Ether, with a market cap exceeding $220 billion and playing a crucial role in the industry, has been around for almost a decade. But, despite the prevalence of Ether, there is no consensus among regulators about its nature."

The filing spotlights the SEC's shifting perspective on Ether, the disagreement between the SEC and the CFTC on the digital asset, and Gensler's recent ambiguous responses to Congress and journalists about Ether's classification as a security or otherwise.

The Chamber's amicus brief, submitted earlier this week, also reflects an argument made by Coinbase in its own lawsuit.

It implies that the SEC has already reached a conclusion about whether to issue a rule but decided against formally responding to the request, as indicated by Gensler's public comments that existing financial market laws suffice for digital asset regulation.

Coinbase has the option to contest the SEC's decision in court, a process that could take a significant amount of time.

However, the company has chosen to take a proactive stance, initiating a lawsuit against the SEC now, to confront the issue on its own terms, rather than await the outcome of a possible investigation into several of its business operations that could lead to enforcement action.

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