Professor warns SEC against moving against Coinbase

Former SEC advisor warns against investigating and other big crypto exchanges.

The SEC will apparently investigate Coinbase for listing cryptoassets it alleges are unregistered securities.

J.W. Verret, a securities and finance law professor at Antonin Scalia Law School, supports the exchange.

Verret, who sat on an SEC advisory committee, wrote in the Wall Street Journal that the commission would be shooting itself in the foot if it did what it wants.

Verret:

"The SEC's argument that most tokens are securities and must register is stupid. It also helps crypto fraudsters and hucksters.

He said innovation demanded a "rethinking of federal securities legislation" The expert said crypto's "aspects" would startle the drafters of the 1933 Securities Act, making it unsuited for the Digital Age.

Even if crypto developers "wanted to register their projects with the SEC, they couldn't," he said.

Verret said crypto projects don't have a board, CEO, or CFO who may file paperwork with the commission. He continued, "they don't have proxy voting by mail, which the commission still needs."

Verret stated that the SEC was "10 years late" in distributing financial statements online and in permitting CEOs to disclose firm information on social media. "It shouldn't do that with crypto," he warned.

The professor asked the SEC to "create a regulatory environment tailored to the needs of crypto investors" and follow "Crypto Mom" Hester Peirce's recommendations.

Following Peirce's advice would help all parties "distinguish legitimate crypto ventures from scams," he said.

Verret said SEC defendants can utilize crypto coins' nebulousness to their advantage.

He cautioned:

"It's excellent when genuine companies like Coinbase get sued. Not against bogus crypto projects. Crypto tokens' morphability will baffle the regulated security definition.

Paul Grewal, Coinbase's chief legal officer, said the company doesn't list securities. Grewal said the SEC analyzed the exchange's process for determining if a coin is a security.