Coinbase Seeks SEC’s Response To Rulemaking Petition, Files Court Action
- The SEC has yet to respond to a July 2022 petition by crypto exchange Coinbase seeking regulatory clarity for crypto assets.
- The exchange has filed a court action forcing the SEC to respond to the rulemaking petition and provide clarity to the crypto industry.
- Coinbase condemned the SEC’s “enforcement-first” move towards crypto regulation without putting proper guidelines in its 2022 petition.
- Chief Legal Officer Paul Grewal said that more than 1,700 firms and corporate entities have submitted comments to the exchange’s petition.
- He said that the Administrative Procedure Act requires the SEC to respond to the exchange’s rulemaking petition “within a reasonable time.”
There has been a constant back-and-forth struggle between the United States Securities and Exchange Commission (SEC) and the largest crypto exchange in the US, Coinbase. The company claims that the regulator is taking an “enforcement-first” approach to regulation without clear guidelines and a regulatory framework. On the other hand, the SEC has yet to respond to a July 2022 petition by the crypto exchange seeking regulatory clarity for crypto assets.
Coinbase has filed a court action in a United States federal court in an attempt to “force” the SEC to respond to the petition that was submitted by the crypto exchange in July 2022 following the onset of the crypto market collapse and the bankruptcies of many crypto-focused companies. Interestingly, the regulator has yet to acknowledge this petition.
In the petition filed in 2022, Coinbase condemned the SEC’s “enforcement-first” move towards crypto regulation without putting proper guidelines in place for companies to follow. Furthermore, the company seeks a “yes or no” response to a July 2022 petition wherein the exchange asked the regulator over 50 questions, all related to the regulation of digital assets.
The questions are broad in space and cover a number of topics. Coinbase has asked various questions from the crypto exchange including the methodology it uses to categorize crypto assets as securities along with the presence of requirements that are technically not possible for crypto companies to implement in their businesses.
Coinbase stated in the petition that it believes that “appropriately tailored regulation is essential to encouraging capital formation in the digital asset industry, protecting digital asset customers and investors, and facilitating the wider adoption of digital asset technology,” while adding:
“We do not currently trade or facilitate trading in digital asset securities because of a lack of clear and workable regulation. But we would consider doing so through our SEC-registered securities broker-dealer subsidiaries once rules are in place that can accommodate the technological manner in which digital asset securities would be offered, sold, traded, custodied, and cleared.”
The court action from Coinbase was accompanied by a blog post authored by the company’s Chief Legal Officer, Paul Grewal, who stated that the Administrative Procedure Act requires the SEC to respond to the exchange’s rulemaking petition “within a reasonable time.”
According to the Coinbase executive, more than 1,700 firms and corporate entities have submitted comments to exchange’s petition “echoing the request for clarity” from the SEC. Meanwhile, the regulator has doubled its crypto enforcement unit in attempts to crack down on several crypto companies.
“If the SEC says no to our rulemaking petition, which it has the right to do, then Coinbase would be allowed to challenge that decision in court and explain in that formal setting why rulemaking is required,” Grewal noted.
Grewal stated that until the crypto industry gets the clarity that it deserves, Coinbase will continue its struggle with the regulators. It is important to mention here that the crypto exchange headed by CEO Brian Armstrong is the only public crypto exchange in the US and is planning to move out to the US according to recent reports.
Recently, crypto exchange Gemini also announced its plans to move outside of the US and focus on other regions of the world, including Asia. The company established an office in Gurgaon, India and plans to hire talent from the country as well.