Ripple’s CTO David Schwartz has once again spoken out about the recent Wells notice issued by the US Securities and Exchange Commission (SEC) to Coinbase. In a tweet, the XRP Ledger architect criticized the SEC for not providing clear guidelines on cryptocurrency regulation.
A Wells notice is a formal notification that allows the recipient to respond to the allegations before the SEC decides whether to pursue the case in court. Schwartz’s comments followed Coinbase’s chief legal officer Paul Grewal’s statement that the SEC needs to establish reasonable rules for crypto in the US, and that Coinbase is willing to comply with them. Grewal also argued that the SEC’s engagement with digital assets has been unfair and unreasonable and that rulemaking and legislation are better tools for defining the industry’s legal framework than enforcement actions. Coinbase maintains confidence in the legality of its assets and services and is open to a legal process to provide clarity.
Coinbase has had over 30 meetings with the SEC over nine months, but the company claims that the SEC has done all the talking. Coinbase’s staking and exchange services have remained largely unchanged since 2021, and the company’s core business model remains the same. Coinbase believes that the US crypto regulatory environment requires more guidance, not more enforcement. The company has also stated that its staking services do not qualify as securities under any legal standard, including the Howey test.
Schwartz also addressed the question of why Ripple did not seek a no-action letter from the regulator before launching against the XRP sales. He replied that he was not part of the process but suggested that no other crypto company had received a favorable outcome from this process, making it unlikely that Ripple would have benefited from it.