Coinbase says DEX (decentralized exchange) cannot be regulated like CEX (centralized exchange).
According to a BTC News report, Cryptobase wrote a letter to the Securities and Exchange Commission June 13 saying DEX exchanges cannot be governed by centralized regulation. According to a company spokeswoman, the SEC has not carried out a true academic economic study on the matter.
“This proposal is too flawed in both process and substance to move forward," Coinbase Chief Legal Officer Paul Gravel said in the BTC News report. "Yet the SEC is trying to preempt congressional action by including unfounded assumptions about its cryptocurrency jurisdiction in proposed rules.”
Gravel went on to dismiss the regulations as political in the statement, BTC News reported. He also said it would not be possible for them to comply with the new regulations from the SEC and that some organizations could be decentralized.
“Decentralized systems do exist and do not have a single organization to enforce compliance," Gravel added, according to BTC News. "Applying the proposed rule to DEX platforms would actually be an impossible requirement. The Commission has not done any real economic analysis and instead has used wasteful economic analysis to justify its political preferences.”
Gravel also claimed the agency is carrying out tasks that are not within its purview, the BTC News report said. According to Gravel, the SEC does not have the jurisdiction to forbid an industry in the absence of express congressional approval as a part of its regulatory authority over the organization. Gravel shared these concerns in an additional eight-page letter to the SEC.
According to Coin Desk, CEX is a digital marketplace where crypto trading takes place, such as Binance, Kraken and Coinbase. A DEX aims to offer lower transaction fees, lets users directly hold their own assets and avoid some regulatory burdens. Examples include Uniswap and Pancakeswap.
