Coinbase Comment Brief Criticizes SEC’s New Definition of “Exchange”

Key Points:

• Coinbase disputes the SEC’s plan to redefine “exchange,” calling it poorly analyzed and based on faulty assumptions.
• The proposal could negatively impact decentralized exchanges (DEXs) and stifle innovation.
• This Coinbase comment brief adds to existing conflicts between the exchange and the SEC.

Coinbase Chief Legal Officer Paul Grewal announced that the company provided a critical comment to the U.S. Securities and Exchange Commission concerning its recent proposal to redefine “exchange” today.

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Coinbase Comment Brief Challenges SEC’s New “Exchange” Definition

Coinbase argues that the SEC’s proposal is riddled with errors, flowing from a lack of comprehensive analysis, nursed by unreasonable assumptions.

In the Coinbase comment brief, the exchange has pointed out several failures of the SEC’s proposal. The firm believes that the proposal fails to outline any problems that exist and need regulation, and the benefits expected from its implementation are hugely exaggerated.

Moreover, Coinbase says the SEC has not carried out any economic impact assessment on how the proposal would affect DEXs, and yet it keeps baseless assumptions and moves forward.

Regulatory Tensions Escalate Between Coinbase and SEC

Coinbase warns that including DEXs in the proposed rule could have severe repercussions for millions of Americans involved in digital assets and stifle innovation in the fast-growing DEX market.

Basically, the exchange reckons that the action of the SEC in making rules on presumed rather than proved issues is antithetical to effective regulatory practice.

The latest criticism forms part of a broader pattern of regulatory rows between the exchange and the SEC. Of recent times, Coinbase, together with VanEck executives, blamed the regulator for raising the borrowing costs on Bitcoin ETFs. According to Coinbase comment brief, the proposal should be withdrawn and revised to be able to address these major concerns.