U.S. Chamber of Commerce Criticizes SEC’s Regulatory Approach to Cryptocurrencies in Coinbase Filing

In a recent court filing, the United States Chamber of Commerce strongly criticized the Securities and Exchange Commission (SEC) for its slow and unclear regulatory actions regarding digital assets, particularly cryptocurrencies. The Chamber not only argued that the SEC’s lack of clarity has immense implications for the rapidly growing $1 trillion digital-asset economy but also declared:

“The SEC’s actions are not just harmful policy; they are unlawful…”

The court filing highlighted the SEC’s failure to establish a systematic process or engage in rulemaking to define which digital assets should be classified as securities under federal law. Instead, the SEC has primarily relied on sporadic enforcement actions and public speeches, creating a regulatory environment filled with uncertainty and instability for digital assets.

1/ BREAKING: The U.S. Chamber of Commerce has just filed a brief in the @Coinbase v. SEC case, calling out the SEC for acting "unlawfully" in the digital asset space.

This is The U.S. Chamber of Commerce–not the Chamber of Digital Commerce.

This is a Big Deal.

Here's why…

— MetaLawMan (@MetaLawMan) May 11, 2023

Last July, Coinbase, a major cryptocurrency exchange, petitioned the SEC to initiate a rulemaking process to clarify the status of digital-asset securities. The petition sought answers to fundamental questions, such as identifying which digital assets should be considered securities. Over 1,700 critics joined Coinbase’s call for clarification. However, according to the Chamber, “the SEC displayed no interest in responding to Coinbase’s request”. Consequently, Coinbase filed a lawsuit against the SEC to compel the regulator into action, prompting the U.S. Chamber of Commerce to submit its court filing.

While the SEC’s Chairman has asserted that securities laws are clear when applied to blockchain-based digital assets, the SEC has failed to formally respond to Coinbase’s petition, effectively denying it without providing written justification.

The Chamber emphasized that the SEC’s lack of clarity has resulted in “economic harm not only to Coinbase but also to the broader business community”. Furthermore, the Chamber asserted that “the uncertainty surrounding digital assets discourages productive behavior, stifles innovation, and undermines American economic and strategic interests. Moreover, the ongoing regulatory uncertainty poses implications for the nation’s geopolitical interests and the continued dominance of the U.S. dollar, as digital assets play an increasingly significant role in international monetary policy.”

“By refusing to engage in rulemaking or address Coinbase’s petition, the SEC has further destabilized the regulatory environment for digital assets”, according to the Chamber.

The court filing pointed out that regulatory clarity is typically achieved through the promulgation of rules applicable to all parties involved. Rulemaking provides numerous benefits, including the requirement for agencies to clearly articulate their regulatory plans and the establishment of fixed effective dates that enable businesses to align their operations with the law, avoiding unintended violations.

The Chamber’s court filing calls on the SEC to address their lack of regulatory clarity promptly, emphasizing the importance of establishing clear rules that will foster innovation, protect investors, and support the long-term growth of the digital-asset economy.

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