Coinbase is a tussle with the United States Securities and Exchange Commission (SEC) for the past 12 months or so as the crypto exchange continues to demand a clear set of digital asset rules from the agency.
Coinbase’s last petition was filed in July last year, which didn’t receive any answer. After that, it decide to file another one in the U.S. Court of Appeals for the Third Circuit in April, pointing out the unreasonable delay by the SEC.
In its recent writ of mandamus, the crypto exchange has been able to gather a lot of support from the industry, most notably from the U.S. Chamber of Commerce (USCC), which is the largest lobbyist in the country.
Can the Crypto Exchanges Move Out of the US?
With so much going on, it might be reasonable to think whether the crypto exchanges, firms, and companies might leave the US. Many more questions can arise as well due to the ongoing situation.
Does the reluctance by the U.S. to give clear regulatory policy about cryptocurrencies would drive away the crypto innovation to different countries? Should the U.S. pay more attention to the crypto market just like the EU or other developed nations?
Most importantly, is the SEC to be blamed for this confusion? While the agency is regarded as the culprit most of the time, it can be that the agency’s hands are tied, or it’s trying to fill in a regulatory gap left the Congress’ incapacity to give an extensive cryptocurrency framework.
Clayton N. Little, a professor of law at the University of Arkansas Fayetteville, and Carol Goforth who is a renowned professor commented on the situation that the government is not sure which assets to consider as security and there is a clear lack of transparency and certainty.
They further added “The U.S. is still trying to figure out its road towards compliance for the digital assets. As a result, it can drive away many businesses from the U.S. to other regions with more clarity, such as Japan and the EU.
Yet, Congress has been unable to deliver to act on the issue of digital assets as there is no federal legislation on the cards as of now.
No “Road Map towards Compliance”
Unlike issuing the same guidance or rules for the crypto assets securities, the SEC has taken a different route for them. It is focusing more on a regulation-by-enforcement approach.
Since there are no clear-cut rules or guidance for crypto assets, crypto asset securities intermediaries, and market participants don’t have a clear-cut idea about compliance.
On the other hand, it is a completely different story for the other nations. Various countries and jurisdictions have already started bringing more clarity to this issue. The UK, EU, Japan, Singapore, and Switzerland, all of them are now bringing more clarity regarding cryptocurrencies.
That has not been the case for the United States and most notably for the SEC as it says to follow the rules that weren’t designed for digital assets.
Targeted Legislation Might Get the Ball Rolling
Michael Selig, who works at a law firm Willkie Farr & Gallagher as counsel in the asset management department, said that it’s highly unlikely to see a comprehensive set of rules for the crypto industry in 2023.
After all, the legislative process on the federal level can be burdensome with various committees in both houses of Congress handling it, Selig said.
He further noted that” You could expect to see an extensive market structure bill in the next few months or so. However, there is a great chance that it would be broken into smaller sections so it becomes easy to navigate its way through the committee process.”