Coinbase strikes back at the SEC again, publishing an article to defend stablecoins

Author: TokenInsight

Within a week, Coinbase has criticized the regulatory decisions of the U.S. Securities and Exchange Commission (SEC) for the second time. The trading platform published an article on Twitter explaining why stablecoins are not securities.

This week, the SEC issued a Wells notice to Paxos, and the New York Department of Financial Services (NYDFS) ordered the company to stop issuing $BUSD. This action sparked extensive discussion and criticism within the crypto community, including Coinbase.

"We do not know which aspects of $BUSD have attracted the SEC's interest," Coinbase stated, "What we do know is: stablecoins are not securities."

Coinbase then elaborated on what stablecoins are and why they are important. "Stablecoins backed by dollars (or cash equivalents) are digital currencies pegged to reserve assets like the dollar, designed to maintain a value equal to that of their peg."

"The value of stablecoins pegged to fiat currency remains stable over time, and their digital nature allows for faster, more efficient, and more accessible transactions. The stability of value over time is also why they are not used as investments."

Stablecoins benefit both customers and businesses. For the former, stablecoins "transcend bank hours and global borders," allowing customers to send and receive, and hold value pegged to the dollar at any time without needing a U.S. bank account. For the latter, stablecoins "make settlement payments instant and cost-effective."

Coinbase believes that "if the dollar continues to be the most trusted and widely used global reserve currency for stablecoins, the U.S. will benefit immensely." However, the SEC's regulatory approach of "imposing securities laws on stablecoins through enforcement rather than guidance or dialogue with the industry" will "push innovation overseas."

"Achieving this requires genuine dialogue between regulators and the industry, followed by clear rules for the industry and pathways for various regulatory bodies themselves," Coinbase added. "In this way, we can ensure that safe technologies like stablecoins can provide greater financial accessibility, efficiency, and innovation in the U.S., rather than through litigation threats without explanation or existing legal basis."

Coinbase has recently been actively discussing regulatory issues. Last week, after Kraken reached a settlement with the SEC, Coinbase's Chief Legal Officer Paul Grewal published a blog post stating that its staking services are not securities. He said, "Trying to overlay securities laws onto processes like staking does not help consumers; instead, it imposes unnecessary mandates that prevent U.S. consumers from accessing essential crypto services and pushes users toward unregulated offshore platforms."