The Blockchain Association, a lobbyist group for the U.S. cryptocurrency industry, said the U.S. Securities and Exchange Commission (SEC) chair Gary Gensler should remove himself from enforcing rules on the crypto sector, arguing his public comments have made clear he doesn’t have an impartial approach to the issues.

See related article: Binance to change euro banking partner from September

Fast facts

  • The statement issued as an open letter follows Coinbase Inc., the largest U.S.-based cryptocurrency exchange, filing a notice of intent on Wednesday to request a court to dismiss the regulator’s lawsuit against the company. 
  • “His steadfast view that all digital assets except bitcoin are securities means that he cannot approach enforcement decisions with a fair and impartial mind,” Jake Chervinsky, the chief policy officer of the Blockchain Association, said in the statement in reference to Gensler.  
  • On June 6, the U.S. SEC sued Coinbase based on allegations that the exchange operated the trading platform as an unregistered financial securities exchange and broker. The SEC sued Binance.US on similar charges a day prior. 
  • Coinbase said in a filing that the SEC was well aware of the exchange’s digital asset operations from its public offering registration in April 2021. It also stated that six of the 12 cryptocurrencies that SEC declared as securities were already being traded on Coinbase when the federal agency reviewed the company’s public offering registration.
  • “The only change is in the SEC’s position regarding its powers,” Coinbase said in the filing. “That position is untenable as a matter of law, and its assertion through this enforcement action offends due process and the constitutional separation of powers.”
  • The SEC has enacted broader legal enforcement on crypto exchanges this year. It fined U.S. crypto exchange Kraken US$30 million for its crypto staking programs, saying the exchange offered unregistered securities. It also warned Binance stablecoin-issuer Paxos Trust Company it faces possible legal action, which led the company to stop minting the stablecoin as the SEC said it was an unregistered security.
  • “Rather than test its new view through notice-and-comment rulemaking, the SEC has chosen to roll out its ever-aggressive agenda through punitive retroactive enforcement actions,” Coinbase said in the filing. “Agency enforcement authority is important but not boundless. The SEC’s action here is beyond those bounds and unlawful.”
  • While Gensler has been supported by many Democrats in his actions against crypto exchanges, he has been criticized from the other side of the aisle, with Republican congressman Warren Davidson introducing a bill named the SEC Stabilization Act on June 13, seeking to restructure the agency and remove Gary Gensler as chair.

See related article: EU publishes draft bill for digital euro and cash payments