The U.S. Securities and Alternate Commission (SEC) has denied a rulemaking petition from cryptocurrency alternate massive Coinbase. The choice reinforces the applicability of existing security approved recommendations, along side what’s outlined as a security, to crypto markets.

“Existing approved recommendations and regulations already apply to the crypto securities markets,” said SEC Chair Gary Gensler. “There is nothing about the crypto securities markets that suggests that investors and issuers are less deserving of the protections of our securities approved recommendations.”

After the choice, Coinbase filed with the Third Circuit appeals court to “utter the SEC’s arbitrary and capricious denial of our petition for crypto rulemaking,” said Coinbase Chief Factual Officer Paul Grewal on X.

Coinbase within the foundation filed the rulemaking petition with the SEC in July 2022 soliciting for the regulator to “propose and adopt rules to manipulate the law of securities that are supplied and traded by digitally native recommendations, along side doable rules to establish which digital sources are securities.”

Gensler said he used to be “pleased” to present a enhance to the SEC’s denial for three causes: the applicability of existing securities approved recommendations to crypto markets, the SEC’s ongoing rulemaking efforts on this residing and the importance of striking forward the Commission’s discretion in environment rulemaking.

A Severe Response

Jason Gottlieb, a accomplice at Morrison Cohen who tracks cryptocurrency litigation, used to be serious of the SEC’s decision.

“Once we glance abet in future years abet and demand why the US has fallen to this level within the abet of in fintech, we may perchance be ready to search abet at this 2d, when the SEC insisted that the solutions promulgated the identical yr as the ENIAC computer didn’t must aloof be modified for the digital age, we can mumble, yes, that’s after we ceded leadership of the monetary world,” Gottlieb said by e-mail. Gottlieb used to be relating to an early form of computer launched in 1946, the identical yr that the “Howey Check” which determines whether an investment product is a security, originated.

Earlier this yr, Coinbase asked a resolve to drive the SEC to reply to its petition, and the resolve agreed. Individually, in June, the SEC charged Coinbase with working as an unregistered securities alternate, broker and clearing agency. The SEC also charged Coinbase for failing to register its staking-as-a-carrier program.

UPDATE (Dec 15, 2023, 5:21 p.m. ET): Added Paul Grewal’s response to the article.