Coinbase executives discussed their company’s regulatory issues publicly on April 27, with chief legal officer Paul Grewal speaking at Consensus 2023 and appearing in a YouTube video with CEO Brian Armstrong.
The company filed an appeal in response to Wells’ notice, which was a notification from the United States Securities and Exchange Commission (SEC) that it may have intended to take enforcement action against it.
“Coinbase’s core commitment to regulatory compliance has never wavered,” Grewal said in a video sent to the SEC chairman and commissioners. Grewal spoke to an audience in Austin at Consensus 2023 around the same time the video went viral, saying, “We’re literally sitting here on the stage asking for regulations, asking for rules, asking for a framework that makes sense for our particular technology. so we can be registered.”
Grewal argues in the video that Coinbase’s business has not changed in the two years since it was approved for a Nasdaq listing. Grewal stated at the time that “the SEC’s position appears to be that it has no legal authority to regulate a business like Coinbase.”
Grewal blamed the SEC’s new stance on FTX. He quoted SEC chairman Gary Gensler as saying, “I feel like we have enough authority, I really do, in this space.” Grewal went on to say that FTX is “very different” from Coinbase. Grewal maintains that Coinbase is regulated and has a New York state “BitLicense” that prohibits it from listing securities.
“If the SEC is to expand its oversight of our industry, we believe legislation or rulemaking is needed,” said Grewal. Last summer, the SEC asked Coinbase to come up with a proposal for crypto companies to register if they wanted to register securities.
Prior to responding to Coinbase’s proposal and weeks before issuing Wells’ “broad but fundamentally vague” notice, the SEC ended those discussions. “We still don’t know exactly what we’re doing that is of concern to the SEC,” Grewal said.
Armstrong discusses his decision to start the company and its early days. Additionally, he stated, “We are committed to working within regulatory limits.” He stated that the company did not list any securities. He went on to say that the company thoroughly scrutinized its offerings and rejected “about 90%” of the assets it saw.
Armstrong also stated that Coinbase is prepared to defend its position in court. “It doesn’t have to come to that,” he said. We welcome genuine discussions about a viable future path for our industry.” On March 22, Coinbase received Wells’ notice, which usually warns of impending SEC enforcement action.