Paradigm, the cryptocurrency investment firm led by Coinbase co-founder Fred Ehrsam, has requested permission to file an amicus brief in support of Coinbase’s ongoing legal battle against the United States Securities and Exchange Commission (SEC). In March, Coinbase received a Wells notice from the SEC, indicating potential enforcement action against the crypto exchange. In response, Coinbase filed a complaint against the SEC in April, seeking clear regulatory guidelines for crypto firms operating in the country.
Paradigm’s filing, made on May 10, expressed support for Coinbase’s stance, highlighting the SEC’s lack of clear rules and guidance for digital assets and trading platforms. The firm argued that this regulatory uncertainty could effectively ban digital asset trading platforms by making it difficult for them to register with the SEC. Paradigm criticized the SEC’s enforcement actions against market participants while failing to provide adequate clarity or respond to Coinbase’s petition for rulemaking.
Many in the crypto industry have voiced concerns about the SEC’s approach to registering firms under Chair Gary Gensler’s leadership, suggesting it does not align with the industry’s reality. Coinbase’s chief legal officer, Paul Grewal, stated that despite numerous meetings with SEC representatives over nine months, the company received limited feedback.
Paradigm emphasized that the SEC’s actions have hampered the growth of a nascent industry and caused confusion among firms unable to comply with unclear regulations or challenge them in court. The ongoing legal dispute between Coinbase and the SEC occurs at a time when U.S. lawmakers are expressing concerns about the lack of regulatory clarity in the country, potentially driving innovation and talent abroad. During a congressional hearing on May 10, some lawmakers pointed to the European Union’s comprehensive regulatory framework for digital assets as a potential model, contrasting it with the fragmented regulatory landscape in the United States.
