- Coinbase found SEC emails showing mixed views on crypto rules through a Freedom of Information Act request.
- SEC failed to respond when asked to support claims that Ethereum is a security in the KuCoin case.
- Technical issues stopped the SEC from opening a key video sent by Coinbase in a regulatory case.
Coinbase has obtained internal documents from the U.S. Securities and Exchange Commission (SEC) that reveal regulatory inconsistencies. The documents were obtained via Freedom of Information Act requests.
The Chief Legal Officer of Coinbase revealed that there are discrepancies between what the SEC states publicly about digital assets and what they communicate within the organization.
The internal records include emails and memos exchanged between SEC officials. One key document dates back to 2019. In it, SEC staff acknowledged a regulatory gap in crypto oversight. This contrasts with the SEC’s later public claim that no such gap exists. The difference raises questions about the agency’s consistency in regulating the crypto sector.
Missing Clarity in Ethereum Classification
The first of the key revelations pertains to Ethereum’s legal status. The New York Attorney General’s Office had requested for the SEC’s input in 2023 for the KuCoin case. The office wanted support in classifying ETH as a security. However, the SEC did not respond. This silence has added to the confusion surrounding Ethereum’s classification.
The inaction of the SEC in the case has been a source of focus. Industry professionals believe that the agency’s confusing stance on ETH would impact current legal actions. Regulatory uncertainty is still a looming threat to companies and investors in the crypto space.
Technical Limitations Raise Concerns
The FOIA documents also reveal technical challenges within the SEC. In a 2023 case, the agency struggled to open a video submission from Coinbase. The file was part of the exchange’s response to a regulatory notice. This incident has raised concerns about the SEC’s ability to handle digital content effectively.
These technicalities imply a more extensive gap in the SEC’s awareness of digital platforms. According to critics, these limitations jeopardize the agency’s capacity to monitor emerging technologies. This may hinder or disrupt enforcement and compliance actions.
Diverging Internal Opinions
The FOIA documents indicate that internal views within the SEC are not always aligned. While some officials expressed concern over crypto regulation, others supported stricter enforcement. The lack of consensus may explain the agency’s unclear and often delayed policy responses.
Inadequate resolution of internal conflicts at the SEC might slow the regulatory clarity process. With the expansion of crypto markets, industry players have been urging regulators to offer more predictable and timely updates. The results from Coinbase show the critical need for coordinated policy actions.
