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The United States Securities and Exchange Commission (SEC) has strictly regulated digital currencies and crypto exchanges like Coinbase. It is currently in a lawsuit with Ripple Lab regarding what it says are illegal sales of unregistered securities. It noted that 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 these events stand, Coinbase, another known digital exchange platform, has filed a comment letter to the SEC, demanding clarity on the core staking services not being securities.
Coinbase Challenges U.S. SEC Statement
The chief 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.
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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 Kraken settlement. Meaning that what Kraken offered should not be considered securities.
Meanwhile, core staking had failed several times to pass the old methodology of the Howey test. This is the methodology the SEC attempts to place on new crypto technology like staking. As such, the exchange demands that the SEC admit that core staking services are not securities.
The outcome of this latest dispute between Coinbase and the SEC could have significant implications for the cryptocurrency industry as a whole. The industry is watching closely to see how this situation unfolds and whether it could lead to increased regulation or legal action against other cryptocurrency companies.
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.
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The SEC had sent a clear notice to Coinbase, stating that it intended to bring legal action against the company over its Lend program. The regulator claimed that the program constitutes unregistered security and violates securities laws.
Coinbase’s response comes in defiance of the SEC’s warning, and it remains to be seen how the regulatory body will react to the company’s stance.
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