The regulatory climate in the United States crypto ecosystem is heating up, and with the Wells Notice sent to Coinbase exchange by the Securities and Exchange Commission (SEC) back in March, many are expecting legal action to follow. Should this happen, a crypto-friendly legal analyst believes the trading platform will come out triumphant against the market regulator.
Taking to his Twitter account, MetaLawMan, as he is popularly called, highlighted how SEC Chairman Gary Gensler revealed in his May 6, 2021, testimony to Congress how the commission is not empowered to regulate crypto trading platforms.
2/ After he was confirmed to his post as Chairman of the SEC, Gensler testified to Congress, on May 6, 2021, that:— MetaLawMan (@MetaLawMan) May 3, 2023
THE SEC DOES NOT HAVE AUTHORITY FROM CONGRESS TO REGULATE CRYPTO EXCHANGES.
Watch this 👇 pic.twitter.com/mk48S36FHm
Commenting on the testimony, the legal analyst said the position of Chair Gensler is correct, adding that only Congress can determine who regulates the exchanges and that the commission cannot wish its own rules into existence.
MetaLawMan is convinced that Coinbase will keenly analyze all communications within the SEC leading up to Gensler's testimony before Congress. The analyst is convinced that every word in the testimony must have been vetted by staff of the SEC and deemed to be true before being uttered. This reality will set the SEC up for failure if it proceeds with any form of legal action.
Polarizing regulatory stance on exchanges
Despite the reality check as pointed out by MetaLawMan, the SEC has carried out a number of definitive legal actions against trading platforms in the U.S. over the past few years.
Kraken was one of the victims of the regulatory crackdown as the commission fined the exchange the sum of $32 million for offering staking as a service, which it deemed a security. In a bid not to get caught in the web of these uncertainties, Coinbase has sued the SEC for failing to provide detailed regulatory guidelines for the industry.
Whether the trading platform has a viable case is based on a different premise, but that does not negate the full interest and support of the community in the legal brawl.