Coinbase slams SEC’s arbitrary approach to DEX compliance

Coinbase submitted a 3rd remark letter highlighting important flaws within the U.S. Securities and Trade Fee’s (SEC) cost-benefit evaluation of the proposed rule. The letter states that the company didn’t assess the financial influence of the rule on effectivity, competitors, and capital formation.

Whereas acknowledging the dearth of vital details about the working and compliance prices of decentralized exchanges (DEXs), Coinbase mentioned the imprecise advantages proposed by the SEC might not materialize, particularly if DEXs are pushed out of the U.S. market.

SEC rulemaking criticized

writer of the e book letter Coinbase Chief Authorized Officer Paul Grewal mentioned the SEC ought to withdraw the proposal and redo it after a radical examine.

The cryptocurrency change’s letter additionally states that the SEC failed to fulfill its statutory obligations, failed to gather vital details about DEXs, acknowledged gaps in understanding key features of its operations, and made unreasonable assumptions primarily based on non-DEX entities.

Coinbase executives consider that the regulatory entity’s method is unfair and irrational as a result of DEX operates basically otherwise and can face excessive compliance prices.

It additional mentioned that with out readability on when digital belongings are labeled as securities, the SEC can not precisely assess the prices and advantages of the proposed adjustments. The company’s inconsistent method of counting on case-by-case litigation reasonably than clear guidelines has created uncertainty for business individuals and courts.

On the similar time, the proposed adjustments add to this uncertainty, vaguely stating that digital belongings might or is probably not securities. This ambiguity undermines the reliability of Coinbase’s cost-benefit evaluation.

Small DEXs in danger

Coinbase has additionally weighed in on the unfavorable influence of the rule on its companies, such because the Base community and its pockets merchandise, probably driving DEXs out of the market. Resulting from excessive compliance prices, smaller decentralized exchanges can be disproportionately affected, creating an unfair benefit for bigger incumbents. The proposal’s imprecise language will increase compliance burdens.

The SEC has beforehand acknowledged such evaluation prices however ignores them right here, additional calling into query the effectiveness of the rule’s price evaluation.