SEC Shuts Down Coinbase Plea for Urgent Crypto Rules, Ignites Fierce Debate
In a recent court filing, the U.S. Securities Exchange Commission (SEC) has formally responded to Coinbase’s petition for clear cryptocurrency regulation, emphasizing that the process of rulemaking may span several years.
The SEC asserts that it is not obligated to meet the specific requirements outlined in Coinbase’s petition and argues that the firm’s call for comprehensive reforms and rule-making within a limited timeframe is unreasonable.
Furthermore, the securities regulator has urged the court to reject Coinbase’s request for mandamus, emphasizing that mandamus is an extraordinary remedy and asserting that Coinbase lacks the necessary grounds to warrant such relief.
Coinbase’s Chief Legal Officer, Paul Grewal, highlighted on Twitter that this filing may mark the first occasion where the SEC provides insights into its perspective on the creation of regulatory rules for the cryptocurrency industry.
Grewal also noted that there are still numerous unresolved matters that require clarification from the SEC.
The SEC stated that both the securities laws and the Administrative Procedure Act do not impose an obligation on it to issue the comprehensive new regulations requested by Coinbase concerning digital assets.
The SEC further emphasized that Coinbase’s own submissions highlight the complexity of the various paths proposed, noting that Coinbase filed its rulemaking petition less than ten months ago, provided supplemental information a few months ago, and recently sought to supplement the record once again.
The SEC’s argument for seeking the denial of Coinbase’s petition is based on the assertion that Coinbase cannot convincingly demonstrate any harm caused by the SEC’s inaction since the initial filing of the petition. Additionally, Coinbase cannot prove that the SEC’s recent enforcement actions in the cryptocurrency sector signify a decision by the Commission to refrain from engaging in rulemaking.
The SEC clarified that it is considering Coinbase’s petition as part of its regular procedures and review process.
In response, Coinbase’s Chief Legal Officer, Grewal, argued that the SEC’s response reinforces the long-standing concern within the industry that there is a lack of clarity regarding the SEC’s jurisdiction and what falls within or outside its purview.
Grewal further expressed the belief that the SEC’s stance may continue to evolve over time.