Uncertain regulations have been the highlight of the U.S. crypto market. This sentiment has even pushed several out of the country. The stringent oversight of the Securities and Exchange Commission [SEC] in particular has brought immense stress to the market. Prominent cryptocurrency exchange Coinbase is clearly on a mission to change this, as it went on to file a court action against the SEC.
Late on Monday, Coinbase filed a lawsuit against the SEC, requesting that the court order the organization to reply to its demand for more clarity around cryptocurrency laws.
In the limited legal action, Coinbase has asked a federal court in the United States to order the SEC to respond “yes” or “no” to a petition submitted in July 2022.
The exchange posed 50 specific concerns to the watchdog in the petition from July 2022. This petition entailed questions regarding how particular digital assets should be regulated. The inquiries cover a wide spectrum. It certainly includes asking the SEC to clarify how it classifies tokens as securities. The petition also notes how trading crypto asset securities on SEC-regulated exchanges will take place.
Additionally, Coinbase revealed that over 1,700 entities as well as individuals have put forth comments to the exchange’s petition. With the Administrative Procedure Act [APA], the SEC is obligated to respond to Coinbase “within a reasonable time.”
What will Coinbase do after the SEC responds?
The exchange addresses both cases. If the SEC responds no to the rulemaking petition, Coinbase can contest the decision in court. The firm will reportedly point out to the court why rulemaking is pertinent. The blog post further reads,
“So it’s important for the SEC and any other agency petitioned for rulemaking to respond to the petition once the agency has made up its mind, especially if the answer is no – otherwise the public can never exercise its right to ask a court if the agency’s decision was proper.”
Coinbase has time and again highlighted the need for regulations. This time, the entity believes that clarity is long overdue.
Furthermore, the above petition was presented on the same day that the SEC said nine tokens offered on Coinbase were unregistered securities, as stated in an insider trading complaint filed against Ishan Wahi, a former product manager for Coinbase, and two other individuals.
Responding to this, Coinbase’s Chief Legal Officer Paul Grewal wrote in the post,
“Regulatory clarity is overdue for our industry. Yet Coinbase and other crypto companies are facing potential regulatory enforcement actions from the SEC, even though we have not been told how the SEC believes the law applies to our business.”