Crypto exchange Coinbase accused the U.S. Securities and Exchange Commission (SEC) of “destroying digital assets” by continuing to tighten regulatory measures. U.S. President Joe Biden vetoed a resolution that would ease regulations for crypto companies.
Lawyers of crypto exchange Coinbase filed a petition to the U.S. Court of Appeals in which they accused the U.S. Securities and Exchange Commission (SEC) and its executives of intending to “strangle” the local crypto industry.
The statement claims that representatives of the regulator don’t believe it’s necessary to create transparent and fair rules for the crypto industry. Instead, the SEC keeps “destroying digital assets” through selective enforcement. According to Coinbase, the regulator considers existing rules to be sufficiently workable, even though those rules rely only on legal precedents.
As arguments, Coinbase’s statement cited the views of the SEC members who also believe the commission is hindering the development of the digital asset industry and jeopardizing the future of new technologies. According to Paul Grewal, Chief Legal Officer at Coinbase, the SEC rules are unworkable for digital asset companies, with all the crypto exchange’s attempts to achieve a direct dialog with the regulator’s representatives coming to naught. Therefore, Coinbase demands that the court prohibit the SEC from acting “without proper authorization from Congress and without making clear rules for the crypto industry.”
The SEC filed a lawsuit against Coinbase in June 2023, accusing the exchange of illegal activity. Coinbase’s lawyers were trying to close the case for a year, achieving only a partial victory.
Tensions in the crypto industry were exacerbated by the U.S. President. Joe Biden vetoed a resolution overturning the SEC’s accounting rule, SAB 121. Biden explained his decision by saying that he doesn’t intend to support measures that could jeopardize the well-being of consumers and investors and undermine the authority of the financial regulator.
The SAB 121 rule requires crypto-asset custodial organizations to account for crypto-assets as liabilities and banks to hold their customers’ crypto-assets on their balance sheets. On May 8, 2024, members of the House of Representatives voted to repeal the rule, and on May 16, the Senate supported the decision.
Biden’s decision was sharply criticized by the crypto community. The Blockchain Association’s reps expressed disappointment that the President’s administration ignored the opinion of the bicameral majority of Congress, which recognized the harm caused by the SAB 121 rule. Cody Carbone, Chief Policy Officer at The Digital Chamber, said Biden gave “a slap in the face to innovation and financial freedom” with his decision. Brad Garlinghouse, CEO of Ripple, also expressed extreme disappointment with the decision of the current U.S. president.
U.S. officials also criticized Joe Biden’s actions. Cynthia Lummis, Republican Senator, claims that the President missed an opportunity to correct his position on crypto-assets amid the election race. She said Biden went against “the will of the American people.” Lummis said that the administration seems intent on stifling crypto-assets and financial innovation.
Recent studies showed that the attitude of U.S. presidential candidates toward crypto is one of the key factors that will determine the final choice of citizens during the vote in 2024.
