Coinbase has disclosed that it received a “Wells notice” from the US Securities and Exchange Commission (SEC). This is a formal notification that the regulator’s staff is recommending an enforcement action against the company for possible violations of securities laws.
Coinbase has revealed that the Wells notice relates to an unspecified portion of its listed digital assets, its staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet. However, the notice does not require any changes to the company’s current products and services.
The notice comes after Coinbase provided multiple proposals to the SEC regarding registration, all of which were refused by the regulator. Despite over 30 meetings with the SEC over nine months, Coinbase claims that they were doing all the talking and the SEC provided no feedback. Furthermore, Coinbase has repeatedly invited the SEC to raise any questions about any asset on its platform but none were raised.
The investigation is still in its early stages, and the SEC has not disclosed any specific concerns about a single asset on Coinbase’s platform. Coinbase claims that the SEC’s decision to issue a Wells notice is unusual given that its staking and exchange services are largely unchanged since 2021 when the SEC reviewed its S-1 and allowed the company to become a public company.
Coinbase has repeatedly called for the development of a regulatory framework for cryptocurrencies and submitted a petition for rulemaking last summer. The company argues that regulatory uncertainty in the crypto industry is getting worse, and the SEC’s continued regulation by enforcement only exacerbates the problem.
The situation with Coinbase is not unique. Even courts have questioned the SEC’s inconsistent positions and lack of guidance to the industry. Federal Bankruptcy Judge Michael Wiles recently made a ruling against the SEC that stated: “Regulators themselves cannot seem to agree as to whether cryptocurrencies are commodities that may be subject to regulation by the CFTC, or whether they are securities subject to securities laws, or neither, or even on what criteria should be applied in making the decision. This uncertainty has persisted despite the fact that cryptocurrency exchanges have been around for a number of years.”
Coinbase maintains that it is confident in the way it runs its business and welcomes the opportunity for Coinbase and the broader crypto community to get clarity in court.
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This article was republished from azcoinnews.com