- Coinbase and Ripple dispute SEC’s “crypto asset security” term, citing no legal basis.
- SEC Chair Gensler faces scrutiny over crypto regulation at upcoming House testimony.
- Lawmakers and legal experts criticize SEC’s inconsistent approach to regulating cryptocurrencies.
The legal heads of Coinbase and Ripple are raising concerns about the U.S. Securities and Exchange Commission’s (SEC) use of the term “crypto asset security.” Coinbase’s Chief Legal Officer (CLO), Paul Grewal, has publicly challenged the term, asserting that it lacks legal foundation in U.S. law.
This dispute comes ahead of SEC Chair Gary Gensler’s scheduled testimony before the House Financial Services Committee alongside all five SEC Commissioners.
Paul Grewal, Coinbase’s CLO, posted on X (formerly Twitter), criticizing the SEC’s use of the term “crypto asset security.” He noted that this terminology is not established in U.S. law, regulation, or any Supreme Court decision.
According to Grewal, the SEC’s inconsistent approach to regulating tokens as either securities or investment contracts adds to the confusion within the cryptocurrency industry.
The challenge to this terminology is not limited to Coinbase. Stuart Alderoty, Ripple’s CLO, has also criticized the SEC for using the term “crypto asset security” without any legal precedent.
Ripple has been in an ongoing legal battle with the SEC over the classification of XRP as a security, and Alderoty argues that the SEC’s use of the term is undermining its credibility in court proceedings.
The timing of these criticisms is significant, as the entire SEC Commission, including Chair Gary Gensler, is set to appear before the House Financial Services Committee. The hearing marks the first time since 2019 that all SEC Commissioners will testify before Congress.
Lawmakers and regulatory representatives like Rep. Ritchie Torres and Majority Whip Tom Emmer have been alarming about the SEC’s regulatory approach toward cryptocurrency and at times have accused the agency of over-reach and discouraging progress.
Other jurisdictions extend to legal practitioners and the businesses in question, like Daniel Gallagher, Chief Legal Counsel of Robinhood, who states that a term used at the SEC is “crypto asset security” not supported by law.
In addition to answering questions concerning its regulatory stance on cryptocurrency, SEC Chair Gensler is being queried for possible violations of legal hiring policies. This adds another dimension to the hearing, as the lawmakers will be looking at how the SEC has been managing and handling digital assets.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.