John Berlau, CEI Director of Finance Policy, today criticized the SEC for its ill-founded lawsuit targeting Coinbase:
“The Securities and Exchange Commission’s (SEC) lawsuit announced today against cryptocurrency trading venue Coinbase is an unprecedented affront against all types of businesses in America who play by the rules but depend on regulatory agencies not arbitrarily changing the rules.
“In its legal complaint calling for Coinbase to be ’permanently restrained and enjoined’ from serving its millions of customers, the SEC is asking for Coinbase to be punished for trading cryptocurrencies the SEC suddenly deemed to be “unregistered securities,” even though no fraud was involved and these digital assets have traded for years without incurring adverse government action. This SEC’s lawsuit is akin to a public health agency trying to shut down a grocery chain for selling food products the grocery has long carried on its shelves because the agency suddenly declares such foods to be unhealthy.
“Assertions by SEC officials such as Chairman Gary Gensler that most cryptocurrencies are securities go beyond even the broad authority to define securities granted to the SEC in the Supreme Court case SEC v. Howey (1946). As I have noted for years, the SEC is increasingly taking the position that a ’security’ under its jurisdiction is any commodity that has investment value. Such a definition could encompass many different types of products – including collectibles and precious metal commodities — and today’s action sets a precedent for the SEC taking adverse action against retailers and wholesalers who sell these products.
“If the courts and/or Congress do not stop the SEC’s arbitrary, unprecedented pursuit of Coinbase, cryptocurrency will not be the only industry to flee U.S. shores. All entrepreneurs who want consistent, predictable rules will think twice about doing business in this country.”
(Disclosure: John Berlau owns shares in Coinbase)
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