Coinbase legal chief challenges SEC chair Gensler’s claim that most crypto tokens are securities News โธ US โธ Coinbase โธ Regulation
Coinbase legal chief challenges SEC chair Gensler’s claim that most crypto tokens are securities
SEC Chair Gary Gensler recently reiterated his stance that most crypto tokens are securities under the law during a TV interview.
2 min read
Updated: May. 7, 2024 at 7:13 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Coinbase chief legal officer Paul Grewal called on US SEC Chair Gary Gensler to stop misleading the market about the legal status of cryptocurrencies in a May 7 social media post.
Grewal made the statement in response to Gensler’s recent CNBC interview with Andrew Sorkin, where he asserted that numerous digital assets fall under the category of securities according to existing law.
However, Grewal countered that the SEC chair’s claims were false as the watchdog’s lawyers have previously acknowledged that cryptocurrencies do not fall under the definition of securities.
In his message to Gensler, Grewal stated unequivocally:
“Please stop misleading the market โ tokens are NOT securities. Their pleadings notwithstanding, your own attorneys have admitted this in court.”
Inadequate crypto disclosure
Meanwhile, Gensler reiterated his known stance that most cryptocurrencies are securities tokens in his CNBC interview, adding that they often lack the necessary disclosures meant for assets in this class.
According to the SEC chair:
“Without prejudging any one of them, many of those tokens are securities under the law of the land, as interpreted by the US Supreme Court. So we follow that law, and you, the investors, are not getting the required or needed disclosures about those assets.”
Although Gensler did not specify which cryptocurrencies he considers securities, recent regulatory actions suggest that all major tokens, excluding Bitcoin, are under scrutiny.
Since assuming the role of SEC Chair, Gensler has prioritized bringing crypto within the commission’s regulatory purview, citing the Howey test as a benchmark for determining securities status.
Critics have lambasted Gensler’s enforcement-centric approach, advocating instead for legislative clarity from Congress. However, progress on crypto-related legislation has been sluggish, prolonging uncertainty in the industry.
Several crypto entities, including Binance, Coinbase, and Ripple, are entangled in legal battles with the Gensler-led commission. Furthermore, during the past month, the financial watchdog has issued Wells Notices to other major crypto firms, such as Uniswap, Consensys, and digital trading platform Robinhood.
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Author 
Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Ethereum
$3,278.42
Ethereum is a decentralized, open-source blockchain platform that enables the creation of smart contracts and decentralized applications (DApps).
Coinbase
Coinbase is a digital currency exchange and wallet service that allows individuals to buy, sell, and store digital currencies, such as Bitcoin, Ethereum, and Litecoin.
Robinhood
Robinhood is an American financial services company headquartered in Menlo Park, California that was founded in April 2013 by Vladimir Tenev and Baiju Bhatt.
Ripple
Ripple is a US-based technology company which develops the Ripple payment protocol and exchange network using XRP, the digital asset native to the XRP Ledger.
Consensys
Consensys is a venture production studio and custom software development consultancy building decentralized applications (DApps), enterprise solutions and developer tools for blockchain ecosystems, focused primarily on Ethereum..
Paul Grewal is the Chief Legal Officer of Coinbase where he is responsible for Coinbaseโs legal, compliance, global intelligence, risk management and government relations groups.
Gary Gensler is an American government official and former investment banker who President Joseph Biden nominated to chair the U.S.
