Coinbase Accuses U.S. SEC of Legal Infractions in Dismissing Cryptocurrency Regulation Proposals
Coinbase’s legal team has taken a significant step in challenging the Securities and Exchange Commission’s (SEC) denial of its petition. They have filed an opening brief in the Third Circuit Court of Appeals, seeking a review of the SEC’s decision and an order to initiate the rulemaking process.
Coinbase, a prominent cryptocurrency exchange, argues that the SEC is overstepping its boundaries by imposing new regulations on the rapidly evolving digital assets industry. The exchange contends that the SEC’s actions lack a clear regulatory framework for these coins and are an infringement on its jurisdiction.
According to Coinbase’s legal team, the absence of well-defined regulations poses a problem for the industry, as crypto firms are left in the dark about the rules they need to comply with. The SEC’s denial of Coinbase’s petition for rulemaking, which took place in December 2023, was decided by a 3 to 2 vote by the Commissioners. SEC Chairman Gary Gensler stated that new rules were unnecessary for rejecting Bitcoin exchange-traded funds (ETFs) since Bitcoins are already subject to existing regulations.
However, Commissioners Hester Peirce and Mark Uyeda dissented from this decision, emphasizing the importance of addressing new technologies and innovations. They believe that the SEC should play a role in addressing the challenges posed by emerging crypto technologies. In response to the SEC’s decision, Coinbase promptly filed an appeal, arguing that it was an “abuse and contrary to law” and violated the Administrative Procedure Act.
Coinbase’s legal filing highlights a regulatory “Catch-22” for digital asset firms. The SEC requires compliance without establishing the necessary regulations through rulemaking. Coinbase asserts that this regulatory uncertainty hinders the growth of the industry and places firms in a precarious position.
Meanwhile, Coinbase also faces legal challenges from the SEC in New York. In June, the SEC filed a lawsuit against Coinbase, alleging that it operated as an unregistered broker, exchange, and clearing agency. The legal proceedings are ongoing, and Coinbase presented oral arguments in January regarding its motion to dismiss the suit. The presiding Judge Katherine Polk Failla has yet to rule on the motion.
Tags: Crypto Regulations