Coinbase Sues SEC for Failure to Provide Regulatory Clarity on Crypto

Coinbase Sues SEC for Failure to Provide Regulatory Clarity on Crypto
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Coinbase sues the SEC for failure to provide regulatory clarity on crypto. In July 2022, the crypto exchange filed a petition in federal court, demanding that the US Securities and Exchange Commission (SEC) respond to their petition.

Fast facts

  • Coinbase announced on April 24, 2023, that it had filed an action in federal court demanding that the SEC react to their petition. 
  • The petition, filed in July 2022, asked the commission to establish and implement regulations governing digital asset regulation.

Coinbase filed a lawsuit against the Securities and Exchange Commission (SEC) late Monday, requesting that a federal court order the SEC to react to its demand for clearer crypto regulations.

This petition was first filed in July 2022. Paul Grewal, Coinbase’s chief legal officer, noted that nearly 1,700 companies and individuals responded in support of the request for clarification.

Grewal further stated that 

“It is also unusual for an agency to bring enforcement actions based on a view of the law that it has not yet shared formally with the public.” Again, Coinbase is not asking the court to instruct the agency on how to respond. “We are simply requesting that the Court order the SEC to respond at all, which they are legally obligated to do.”

Paul Grewal

The petition includes a number of queries, some of which concern the SEC’s approach to designating specific tokens as securities, while others concern asset custody and trading cryptocurrency asset securities on SEC-regulated exchanges.

The petition was submitted on the same day that the SEC claimed nine Coinbase tokens were unregistered securities in an insider trading case filed against a former Coinbase product manager, Ishan Wahi, and others.

Coinbase CEO Brian Armstrong has consistently underlined the importance of the SEC clearly defining the regulations governing the digital asset market.

“Regulators should come up with the rules, tell everybody the rules, and we follow them.” “The current laws are not clear, and we would like to get more clarity.”

Brian  Armstrong

The company believes that regulatory clarification in the cryptocurrency market has been long overdue. Despite the SEC launching a series of prospective regulatory enforcement actions, crypto companies have yet to be told how the SEC feels the law relates to their operations.

Coinbase’s announcement comes on the heels of the CEO’s previous tweet, in which he stated that a few members of the company flew to the SEC headquarters in Washington. 

“Met with the SEC today. We’ll continue pushing for a clear rule book in the U.S. for crypto regs,” Brian Armstrong wrote. “The U.S. can’t afford to fall behind on this important technology to update the financial system.”

The exchange’s challenge comes amid a regulatory crackdown in the United States, where agencies such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have increased their scrutiny of digital asset firms this year.

Featured image: Shutterstock

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