These are the 9 cryptocurrencies from Coinbase that would fall under SEC legislation

Last Updated: 22 July 2022

The largest US financial watchdog has labelled nine cryptocurrencies as securities, which means they are now subject to securities laws. The Securities and Exchange Commission (SEC) has been criticised for focusing on enforcement rather than providing legal guidance.

The link with Coinbase

The nine cryptocurrencies are all offered by the US-based Coinbase. They are:

  • Flexa’s AMP
  • Rally’s RLY
  • DerivaDEX’s DDX
  • XY Labs’ XYO
  • Rari Capital’s RGT,
  • LCX, the governmental token of an exchange in Liechtenstein
  • Power’s POWR
  • DFX Finance’s DFX
  • Kromatika Finance’s KROM

So all these tokens are offered on Coinbase and hosted on Ethereum’s blockchain. When you read the indictment, it is no coincidence that precisely these ‘Coinbase-coins’ are named.

Part of the indictment

There is more to it than simply labelling nine coins. The SEC has launched a case accusing a former Coinbase employee and two associates of insider trading. The same complaint states that at least nine of the cryptocurrencies on Coinbase should be covered by securities laws.

Many in the crypto industry saw this as an example of regulation through enforcement. In other words, the SEC wants to flex its muscles.

SEC wants to regulate cryptocurrency

The filing marks one of the few instances where specific crypto currencies have been deemed securities by the SEC. In the past, the SEC has refused to clarify the legal status of many cryptocurrencies while constantly claiming that many cryptocurrencies should fall under their purview.

A perfect example of this is the lawsuit against Ripple. Since December 2020, the SEC and Ripple have been engaged in a legal battle over whether XRP is a security or not. After almost two years of litigation, the SEC has yet to convince the judge. Of course, it helps that Ripple has deep pockets and can, therefore, deploy a lot of legal clouts.

Criticism of the SEC

Back to the indictment. Coinbase responded to the SEC through a blog post requesting that a regulatory framework for cryptocurrencies be “guided by formal procedures and a public process of notice and comment, rather than by arbitrary enforcement or guidance developed behind closed doors.”

Not only commercial parties from the crypto industry are critical of the SEC, but Caroline Pham from the Commodities Futures Trading Commission (CFTC) doesn’t get it either. She shows her displeasure on Twitter.

“The SEC v. Wahi case is a striking example of ‘regulation by enforcement,” Pham wrote before claiming that the SEC’s allegations could have “broad implications” beyond the case itself.

Nine lawsuits

Her sentiment was shared by Jake Chervinsky, the head of the Blockchain Association’s policy, who said the case was a “mess” that would likely require “nine mini-trials” to determine whether each token is truly a security.

Criticism of the SEC is also coming from politicians. Republican Tom Emmer criticised the SEC during a congressional hearing for “using enforcement to expand its jurisdiction,” calling the agency “power-hungry” and “hellbent.” Emmer said the SEC is doing everything it can to achieve its political goals at the expense of the crypto industry.

The SEC’s Gurbir Grewal admitted during the hearing that the regulator has routinely acted against crypto industry participants in ways that may be beyond its jurisdiction.

  • Steven Gray

    Steven Gray is an experienced cryptocurrency and blockchain journalist with over 7 years of reporting on the crypto industry across major publications. His proficiency in technical analysis provides him the skills to evaluate complex trading algorithms and AI systems. Steven leverages his extensive network of academics and finance professionals to incorporate expert opinions into his unbiased analyses.

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