> because we think your business might be breaking ambiguous laws
I think Coinbase and the their investors would have appreciated a real a priori ruling on whether their business is an illegal securities exchange before going public but we can't do that for some reason.
Risks To Our Business: The SEC might shut us down for being an illegal securities exchange but has no way of telling us in advance if we're breaking any laws ¯\_(ツ)_/¯
I think there is very little room for this sequence of events to be considered fine. If there is any sense at all that the SEC's mission to protect retail investors "their whole publicly stated business model might be illegal and we might sue them out of business" is something you might say, "we're not sure if we're comfortable with you going public yet."
They didn't use those words, but they basically did put that in the S-1 [0]:
> We are subject to an extensive and highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition.
> ...
> A particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a crypto asset, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, and our business, operating results, and financial condition may be adversely affected.
> ...
> The SEC and its staff have taken the position that certain crypto assets fall within the definition of a “security” under the U.S. federal securities laws. The legal test for determining whether any given crypto asset is a security is a highly complex, fact-driven analysis that evolves over time, and the outcome is difficult to predict. The SEC generally does not provide advance guidance or confirmation on the status of any particular crypto asset as a security.
I think Coinbase and the their investors would have appreciated a real a priori ruling on whether their business is an illegal securities exchange before going public but we can't do that for some reason.
Risks To Our Business: The SEC might shut us down for being an illegal securities exchange but has no way of telling us in advance if we're breaking any laws ¯\_(ツ)_/¯
I think there is very little room for this sequence of events to be considered fine. If there is any sense at all that the SEC's mission to protect retail investors "their whole publicly stated business model might be illegal and we might sue them out of business" is something you might say, "we're not sure if we're comfortable with you going public yet."