The Securities and Exchange Commission (SEC) has faced criticism from the United States Chamber of Commerce for a lack of clarity about which digital assets are securities under federal law. This issue has “huge implications for everyone involved in the $1 trillion digital-asset economy,” a court filing by the House states.
According to the filing, the SEC has refused to engage in any systematic process or rulemaking to define what the claimed authority means, instead offering an enforcement action and public hearings. This creates regulatory uncertainty and undermines the regulatory environment for digital assets.
In July 2022, Coinbase petitioned the SEC to begin rulemaking on digital-asset securities. It urged the Commission to answer basic questions such as “what digital assets are securities?” More than 1,700 commenters echoed Coinbase’s call, but the SEC expressed no interest in responding to Coinbase’s request, according to the Chamber. Coinbase then pursued a lawsuit against the SEC to force the regulator to act, which is where the US Chamber of Commerce filed.
The Chairman of the SEC stated that securities laws are not clear as applied to blockchain-based digital assets. Despite Coinbase’s strong denial of the petition, the SEC declined to recall its decision in a formal response.
According to the Chamber, the SEC’s lack of clarity has caused economic damage to Coinbase and the broader business community. Uncertainty stifles productive behavior and stifles innovation and undermines broader American economic and strategic interests. The continued uncertainty also has implications for the country’s geopolitical interests and the continued superiority of the dollar, due to the growing relevance of digital assets in international monetary policy.
The SEC’s refusal to participate in rulemaking or respond to Coinbase’s rulemaking petition has harmed the regulatory environment for digital assets, the Chamber said.
“Agencies generally provide regulatory clarity by promulgating rules of general applicability,” the filing states. “This preference rulemaking has significant benefits: It forces agencies to put their regulatory plans on paper, and it provides for specific, future effective dates that ensure parties can in their conduct in conformity with the law rather than be liable later for the breach of duties they did not know existed.”