The US Securities and Exchange Commission (SEC) has opened an investigation against Coinbase to determine if the cryptocurrency exchange is listing any unregistered securities, according to a Bloomberg report on Tuesday.
Though there is no official confirmation yet, the publication cited three anonymous insiders to report the regulatory probe.
Coinbase is listing around 150 digital assets on its crypto exchange platform. The SEC investigation came as the number of listing on the exchange increased significantly.
Interestingly, it came only days after the US regulator said that seven cryptocurrencies listed on Coinbase are securities, without naming any. However, that came as a part of an unrelated case in which the SEC charged a former Coinbase employee for insider trading.
“We are confident that our rigorous diligence process, a process the SEC has already reviewed, keeps securities off our platform, and we look forward to engaging with the SEC on the matter,” Coinbase’s Chief Legal Officer, Paul Grewal, wrote on Twitter.
No Clear Rules to Define Crypto as Securities
There is a heated debate going on in the US over the categorization of cryptocurrencies. While there is clarity over Bitcoin and Ethereum being commodities, the SEC believes that many other cryptocurrencies are securities. It has even engaged with Ripple to determine if XRP is considered securities or not.
Earlier, the SEC Chair, Gary Gensler said that Coinbase should register as a national securities exchange because of some of the listed cryptocurrencies. Now, if the regulator officially declares some of these tokens as securities, Coinbase has to get that license to remain operational.
Furthermore, Coinbase criticized the securities regulator for not providing any clear rules defining cryptocurrencies that can be termed as securities.
“Coinbase has a rigorous process to analyze and review each digital asset before making it available on our exchange, a process that the SEC itself has reviewed,” Grewal wrote in a blog post earlier. “This process includes an analysis of whether the asset could be considered to be a security, and also considers regulatory compliance and information security aspects of the asset.”
