Coinbase Appeals to Court for SEC to Initiate Crypto Rulemaking Process
Summary:
In an ongoing dispute with the U.S. Securities and Exchange Commission (SEC), Coinbase requested a court to order the regulatory body to initiate long-overdue rulemaking for the crypto market. The exchange claimed that the SEC's dismissal of a request for rulemaking was arbitrary and lacked sufficient reasoning. Coinbase argued that changing its stance on its authority over crypto required Congressional approval and insisted that any decision without it must be made through prospective rulemaking. This is separate from a lawsuit filed by the SEC against Coinbase in June 2023, accusing the crypto exchange of operating without a license and offering unregistered securities.
In an ongoing legal battle with the United States Securities and Exchange Commission (SEC), crypto exchange Coinbase has requested a court to compel the regulatory body to commence long-awaited rulemaking processes for the crypto sector. Coinbase argued in an opening brief on March 11 in the Third Circuit Appeals Court that the SEC's rejection of its July 2022 petition requesting rulemaking for crypto, and the insufficient rationale provided for it, violated the Administrative Procedures Act governing regulatory procedures. The exchange said the SEC's dismissal reasons were unsatisfactory and it is necessary to provide a reasonable explanation for refusing rulemaking. They further alleged the rejection was arbitrary as the SEC did not illustrate how securities laws apply to cryptocurrency while distinctly enforcing these laws by pursuing several crypto companies over legal violations. They asked the court to grant their review petition and push the SEC to initiate the rulemaking process. Coinbase Legal Chief Paul Grewal stated the SEC must explain why they believe they have the authority to assert new control over digital assets in a rulemaking process and allow public understanding and scrutiny. Coinbase, conveying a shift in the SEC's stance, alleged that the agency claimed to have limited authority over crypto due to legal ambiguity, but then declared it had enough jurisdiction to regulate the sector. They alleged the SEC’s change in approach required Congressional approval, a stand supported by Coinbase, Kraken, Binance, among others, in their motions to dismiss SEC lawsuits. Coinbase insisted that if the SEC continues to barrel ahead sans congressional approval, this decision must be enacted prospectively through rulemaking. These claims are separate from the SEC's lawsuit against Coinbase in June 2023, accusing it of functioning as an unlicensed exchange and offering unregistered securities. Earlier this year, both entities presented oral arguments regarding Coinbase's motion to dismiss the case, using largely the same points—that the SEC has no jurisdiction over crypto exchanges unless Congress confirms it.
Published At
3/12/2024 6:03:02 AM
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