Since July, Coinbase has been requesting regulations for the cryptocurrency industry. Now, the company is fighting to force the SEC to respond.
In an attempt to force the country’s securities regulator to respond “yes” or “no” to a petition that the exchange has had outstanding since July, Coinbase has filed a lawsuit in a federal court in the United States.
The Securities and Exchange Commission was petitioned to create and implement clearer guidelines for the U.S. crypto sector.
The exchange petitioned the financial regulator to respond to a total of 50 specific concerns about the regulation of particular digital assets. The inquiries cover a wide range of issues, and one of them asks the SEC to elaborate on its classification process for tokens as securities.
Coinbase Chief Legal Officer Paul Grewal penned a blog post to go along with the action, stating that the Administrative Procedure Act requires the SEC to provide a response to the exchange’s rulemaking petition “within a reasonable time.”
Today, we filed a narrow action in the U.S. Circuit Court to compel the SEC to respond “yes or no” to a rulemaking petition we filed with them last July asking them to provide regulatory guidance for the crypto industry. 1/4 https://t.co/rlsS1DIFfl
— paulgrewal.eth (@iampaulgrewal) April 25, 2023
The exchange is pleading for a response now that more than nine months have gone without hearing back:
“It appears that the SEC has already decided to reject our petition. But they haven’t yet made it public. Therefore, the lawsuit Coinbase filed today just requests that the court ask the SEC to disclose its conclusion.” “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,” said Grewal.
Grewal emphasized the necessity for clarity on these issues, particularly in light of the Wells notice that Coinbase received on March 22 that suggests prospective enforcement actions against the cryptocurrency exchange.
Grewal continued, “Coinbase and other cryptocurrency companies are at risk of regulatory enforcement actions from the SEC, despite the fact that we are unaware of how the SEC considers the law relates to our business.
On February 9, Kraken and the SEC agreed to a settlement for “failing to register the offer and sale of their crypto-asset staking-as-a-service program,” which the regulator claimed was a program that should have been registered as a security under its authority. The exchange paid a $30 million fine and agreed to stop operating its staking-as-a-service program for U.S users.
Internally, the move was unpopular; SEC Commissioner Hester Peirce criticized her own organization for closing a “program that has served people well” and referred to the SEC’s actions as “not an efficient or fair way of regulating.”
The SEC and the New York Department of Financial Services ordered Paxos, the company behind the U.S. dollar-pegged stablecoin Binance USD, to stop producing and distributing the token on February 12 of this year.
Democratic Massachusetts Senator Elizabeth Warren stated on March 31 that she will be establishing an “anti-crypto army” as an essential part of her Senate re-election campaign, adding to the surge of action against cryptocurrency in the U.S.
Coinbase recently announced its plan to shift some of its operations outside the United States as the country grows increasingly strongly opposed to the cryptocurrency business. On April 19, Coinbase was granted permission to conduct business in Bermuda, where it plans to open a derivatives exchange as soon as this week.
As the only publicly traded cryptocurrency exchange in the country, professionals will be analyzing Coinbase’s upcoming earnings report on May 4 to determine the state of the whole U.S. crypto market.