Coinbase is refuting claims from the SEC that it lists securities on its platform after the SEC claimed in a court filing last week that Coinbase lists at least nine digital assets that should be registered securities. Reports on Tuesday said the SEC has launched an investigation into the situation. The agency's claims about Coinbase have led to a significant debate in the crypto space around crypto regulation. Rahsan Boykin, general counsel at Hashflow, joined Cheddar News' Closing Bell to discuss.

Closing Bell

Coinbase Faces SEC Investigation Over Cryptocurrency Listings, Crypto Exchange Denies Agency's Claims

and jumping back to the story involving the sec and coin base at the agency claiming here about the company. That's led to a significant debate in the crypto space about whether certain crypto token should be registered as securities. It's a big debate and a lot is on the line here. So everyone from the head of F. T. X to Mark Cuban weighing in and joining me now to discuss is Rosen Boykin, general counsel at the decentralized exchange platform hash flow. Thank you so much for joining. I'm just curious to get your take as to what you think is the best way reason to actually classify some of these kryptos. Yes. Hi Kristen. Thanks for having me. Yeah, this case is really, really important. It has a lot of far reaching implications in it. The sec is claiming that kind of back handedly, honestly claiming that these tokens that it's identified are actually securities and not commodities, which I'm sure came to as a huge surprise to these particular projects because the regulators in the United States have failed to date to issue very clear guidance on what constitutes a security and what constitutes a commodity. So I'm sure these projects were not aware that they were going to be classified as a security in this case. And I'm sure it also came to a large, a huge surprise to coin base itself who, who goes through a lot of takes a lot of costs on to create a process to evaluate whether the tokens it lists are or are not securities. So I'm sure coin based was not prepared for these tokens. That had really nothing to do with the case other than that this employee was trading them to be listed security. Well, let me ask you this reason, what's at stake here for coin base? I mean, what could the sec hold this company accountable for both on a monetary perspective and even on an operation standpoint? Yeah, absolutely. For coin based, these are there are huge implications because it prides itself and and goes through a lot of hoops to make sure that it's not listing securities on its platform. If it does list securities on its platforms, that would bring it under the purview of the SEc, Which means it would have to take on all the operational costs of complying with the rules, Which can be quite onerous additionally, if they were in violation of any of those rules, it could be a monetary liability attached to that. So, it's a really big case for coin base and goes right to its core business model. Well, I do want to ask about Mark Cuban because he's been a big backer of Cryptocurrency for a while now, and he did weigh in on the debate, the billionaire saying that the sec claims are a nightmare for the crypto space. And I guess I'm wondering is it just an excuse by the sec to ask for more taxpayer money here. What do you think? Yeah. So, first I want to start and say, you know, the sec has a really hard job, right? Everybody who operates in the financial markets knows that these financial regulators, the sec, the CFTC have a really hard job and are working really hard to protect the public. That being said, I think Mark is really just acting right now, is the voice of the industry, in that there is a really huge concern that the sec is going to be too far reaching and and cause for too much bureaucracy and too much cost to affect the industry, which would therefore push the industry away from the United States. The sec, unfortunately, whether fair or unfair, has a bit of a reputation for being very rules based, which is kind of scared away certain projects from kind of coming in and and identifying themselves uh, to the sec because they're worried that if they're doing something wrong and they don't know that they're doing something wrong, then they'll become a target again. I don't know if that reputation is fair or unfair, but I think that's what Mark is really commenting on, he's worried that the sec is going to have to heart of the hand and then uh kind of hamper innovation in the industry. What kind of President Hassan does it set if these three individuals, one who was a former product manager at coin based are actually convicted of insider trading. Yeah, so, I mean, there are a lot of implications for this case for the, for the individual employee and the companies that employ the employees, like that type of employee. They really need to implement insider trading policies uh to ensure that the public is protected from actions like this. And I think responsible projects will do that. But there are other, you know, other, I would consider, you know, further for reaching uh implications like whether or not again the underlying tokens are actually securities, the process that coin based uses in order to evaluate whether or not a token security that's going to have to be looked at. And whether or not ultimately exchanges like Coinbase are gonna have to register under the sec or the CFTc. Okay, listen, we got to leave it there are really good to get your take a really important story that I know of the whole space. Um it's gonna be watching closely. That's for Sun Boykin, general counsel and hash flow