Coinbase argues in SEC letter that DEX cannot be regulated as centralized exchanges

Representatives of the cryptocurrency exchange Coinbase sent to the U.S. Securities and Exchange Commission (SEC) a письмо, in which they stated the impossibility of regulating DEX as centralized exchanges.

The company’s chief legal officer, Paul Grewal, said that the agency’s powers do not include the authority to ban decentralised platforms without clear authorisation from Congress.

Yesterday we filed a comment letter on the @SECGov proposed rule that seeks to expand the definition of exchange to include DEXs. Tl; dr: this proposal should NOT be adopted, and certainly not before completing the threshold steps for any rulemaking. 1/11 https://t.co/fBXAYiWb4W

— paulgrewal.eth (@iampaulgrewal) June 14, 2023

According to him, last year the SEC attempted to implement a definition of a DEX “without public notice”.

“Truly decentralised systems do exist, and there is no single organisation capable of bearing responsibility for compliance with the requirements. The proposed rule as applied to DEX would be an unenforceable requirement,” wrote Grewal.

In his view, the Commission has not conducted a real economic analysis of the sector and instead “promotes its political preferences”.

In June the SEC filed suit against leading cryptocurrency exchanges Binance and Coinbase. In the latter, refused to change their business model due to the regulator’s lawsuit.

As Grewal noted, the agency’s approach to regulating the cryptocurrency industry is “undermining the competitiveness of the United States”.