Coinbase is all set to put forward a prospective policy structure to official authorities. In the opinion of people knowledgeable about legal negotiations, the company wants to declare this plan official in the days ahead. The plan’s specifics were not known at the time of writing. However, they also want to negotiate about what must and must not be recognized as ‘security’, among a host of other issues. These events and statements come after Coinbase made it clear that their loan product is off the charts for now. The Securities and Exchange Commission (SEC) warned that such a product would be illegal according to existing laws.
Coinbase’s legal expert Paul Grewal and managing director Brian Armstrong announced in a previous statement that the SEC had given the company a Wells Warning. It stated that if Coinbase’s borrowing product launches, the authority will sue the company.
The SEC made it clear that the concerned product seemed to be an infringement of securities legislation based on two Judicial rulings: the Howey and Reves decisions. Though the notice served was not made public, legal analysts believe the regulators are equating the product to shares or certificates of deposit. These are securities that are regulated by the Securities and Exchange Commission (SEC). Coinbase has longstanding experience with striving to systematize how exchange platforms handle crypto offerings and goods by developing tools and mechanisms.
Coinbase was among the founding members of the CRC (Crypto Rating Council). It is a 2019 initiative designed to create a shared understanding of how to define and classify securities with respect to crypto assets.