Coinbase recently filed a closing brief with the US Court of Appeals for the Third Circuit, contesting the SEC’s refusal of its rulemaking petition. The crux of the issue lies in a singular sentence in the SEC’s order that “disagreed” with Coinbase’s claim that current SEC regulations are impractical for digital asset companies. Coinbase asserts that this lack of comprehensive decision-making should lead to the nullification of the regulator’s order.
Coinbase is calling for the court to oblige the SEC to conduct rulemaking for the cryptocurrency industry. Paul Grewal, the Chief Legal Officer at Coinbase, took to social media to underscore the significance of this legal battle and lambasted the SEC for failing to provide substantive rationale for its opposition. Grewal highlighted the broader repercussions of the SEC’s stance, contending that the agency is overstepping its bounds without explicit approval from Congress and without establishing coherent rules for the burgeoning digital asset sector.
Grewal further expressed apprehensions about the SEC’s approach, accusing the agency of seeking to impede the digital asset industry’s growth. Coinbase’s legal brief echoes this sentiment, arguing that the SEC’s actions are part of a deliberate campaign to dismantle the industry by enforcing compliance with impracticable regulations. The brief asserts that the SEC’s failure to engage in proper rulemaking breaches the Administrative Procedure Act (APA), which necessitates agencies to conduct rulemaking for significant policy revisions.
Coinbase maintains that the SEC’s policies on digital assets have been erratic and lack a coherent legal standard, rendering compliance unattainable for industry participants. The brief contends that the SEC’s inconsistent statements over the years and its aggressive enforcement moves, targeting only select digital assets without clear guidance, necessitate the agency to embark on rulemaking to establish unambiguous and workable standards for digital asset entities.
This legal dispute has captured considerable attention from the crypto community and regulatory observers due to its potential far-reaching repercussions for digital asset regulation in the US. Coinbase’s challenge mirrors the ongoing conflict between the digital assets sector and regulatory entities as the industry clamors for transparency and equitable treatment under the law. The Third Circuit’s ruling on this matter will be closely monitored, as it could shape the future of digital asset regulation and delineate the extent of the SEC’s influence over the industry.
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