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Popular American exchange Coinbase has raised serious concerns over the U.S. Securities and Exchange Commission’s (SEC) proposed new definition of an “exchange.” According to the Coinbase team, the SEC’s analysis contains significant flaws that could have broad and unintended consequences for the entire cryptocurrency space.
In a detailed response, Coinbase argued that the SEC’s proposed definition is overly broad and could capture entities that were never intended to be regulated as exchanges. According to Coinbase, the new definition could include decentralized platforms, which operate differently from traditional exchanges, and various other blockchain-based projects.
Today @coinbase submitted another set of concerns with @SECgov over the agency’s proposal to expand the definition of “exchange.” In short, the SEC’s proposal lacks critical analysis, rests on irrational assumptions, fails to show that there is any problem in need of regulation,…
— paulgrewal.eth (@iampaulgrewal) August 12, 2024Coinbase also pointed out that the SEC’s definition lacks clarity, potentially leading to confusion and stifling innovation in the rapidly growing digital assets space. “The current proposal is not only confusing but also poses a risk to the future of modernisation in digital finance,” a Coinbase official said.
Impact on the Crypto Industry
Experts noted that the proposed rule could force many blockchain projects to either halt operations or undergo significant changes to comply with the new requirements. Coinbase believes that this would have a chilling effect on innovation, particularly in the U.S., where many crypto companies are striving to develop new technologies that challenge the traditional financial system.
Coinbase’s expert also suggests that the SEC’s approach could push more crypto firms offshore, seeking friendlier regulatory environments. So it could badly impact the U.S. economy by driving innovation and jobs overseas.
Suggestion For Revised Approach
Coinbase has requested the SEC body to reconsider its proposal and engage in more meaningful discussions with industry stakeholders. The company is advocating for a perfect definition that accurately reflects the unique characteristics of blockchain technology and the decentralized nature of many crypto platforms.
Coinbase’s spokesperson also said “regulation is important, but it needs to be done in a way that fosters innovation, not stifles it.”
Read also: Michael Saylor Predicts Massive Influx of Capital into Bitcoin: “Go Buy Bitcoin”
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