The United States Securities and Exchange Commission (SEC) has been persistently examining the cryptocurrency industry. This has led specialists to contend that the absence of regulatory clarity is hindering the sector’s development.
Coinbase has also found itself under the SEC’s microscope in its ongoing crackdown on cryptocurrency platforms.
Coinbase fighting against the crypto crackdown
In light of this ambiguity, Coinbase has taken initiative by submitting two new Freedom of Information Act (FOIA) requests.
With these submissions, the exchange intends to understand the SEC’s viewpoint on cryptocurrency regulation and clarify the regulatory landscape surrounding digital assets, which remains a contentious issue for those in the industry.
Providing further insight, Coinbase’s Chief Legal Officer (CLO), Paul Grewal, revealed important specifics of the requests and underscored,
“We submitted two new sets of FOIA requests in our ongoing pursuit of clarity regarding how regulatory bodies are handling digital assets. In essence, as long as the government holds firm, so will @coinbase.”
Grewal noted that the first FOIA request aims to gather documents concerning a digital asset deposit limit that banking regulators, including the Federal Deposit Insurance Corporation (FDIC), placed on financial institutions.
What else is happening?
The second request seeks information on how these agencies oversee other FOIA requests.
He also clarified that these new filings differ from the FOIA requests Coinbase submitted over a year ago, which have escalated into federal lawsuits since then.
Source: Paul Grewal/X
Reports suggest that the Federal Deposit Insurance Corporation (FDIC), responsible for insuring bank deposits in the U.S., has allegedly directed banks to restrict deposits from cryptocurrency firms to 15% of their total deposits.
This situation is controversial because the FDIC apparently set this cap without soliciting public feedback, a typical requirement under U.S. law for banking regulators before making such regulatory choices.
Is the SEC opposing the crypto industry?
As anticipated, Coinbase is not the only cryptocurrency firm facing scrutiny from the SEC.
Ripple Labs has also come under renewed examination as the SEC recently submitted a ‘Civil Appeal Pre-Argument Statement’ (Form C), indicating its intention to contest a previous court decision in the ongoing legal struggle.
The legal battle between Ripple Labs and the SEC, which began in 2020, has been an extended and highly publicized dispute over the regulatory classification of XRP and digital assets.
Despite the escalating regulatory pressure, Bitwise’s CIO, Matt Hougan, recently asserted that Coinbase seems to be the primary beneficiary amidst the increased U.S. enforcement actions within the crypto realm.
He encapsulated this sentiment aptly when he remarked,
“The adversarial regulatory climate is creating an artificial ‘moat’ for Coinbase, allowing it to maintain exceptionally high profit margins and enabling it to outperform in the short term.”
