Coinbase Hasn't Proven SEC Needs to Create Crypto-Specific Rules, Regulator Says

Coinbase asked a federal appeals court to force the SEC to respond to a petition last month.

AccessTimeIconMay 16, 2023 at 6:48 a.m. UTC
Updated May 16, 2023 at 3:08 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The U.S. Securities and Exchange Commission (SEC) told an appeals court that crypto exchange Coinbase hadn't proven the regulator needs to create a new regulatory framework for the digital asset industry late Monday.

The federal regulator asked the court to reject a Coinbase petition asking for additional regulatory guidance specifically tailored to the digital asset industry. The SEC has not yet made any decision on the petition and "continues to consider" the filing, the regulator said in a filing.

Coinbase filed its original petition with the SEC in July 2022, asking the regulator to provide guidance around digital assets. Last month, the crypto trading platform filed a Mandamus petition with the U.S. Court of Appeals for the Third Circuit, asking it to force the regulator to respond to the petition during an escalating legal battle; Coinbase filed a response to an SEC Wells Notice the same week.

In its response Monday, the SEC said the company was expecting a response after less than a year, while the agency has taken up to five or 10 years to respond to petitions in other areas in the past.

"As Coinbase’s own submissions make clear, considering the various paths it suggests is a necessarily complicated endeavor," the SEC filing said. "Yet Coinbase filed its rulemaking petition fewer than ten months ago, supplemented aspects of the petition fewer than three months ago, and sought to supplement the record again only weeks ago."

The SEC has received more than 1,600 "form-letter comments" and eight original comments, the regulator said. Coinbase filed three of the latter.

The federal securities regulator also noted that considering new rules or amendments to existing regulations does not preclude it from enforcing existing regulations.

"Coinbase attempts an end run around the clear precedent foreclosing relief in these circumstances by arguing that all the Commission needs to do is memorialize its denial of Coinbase’s petition – a decision Coinbase incorrectly asserts has already been made," the SEC said. "But it is undisputed that there has not been any final agency action on its petition, and Coinbase’s argument is largely premised on the erroneous view that recent Commission enforcement actions indicate a Commission decision not to engage in rulemaking."

Edited by Parikshit Mishra.


Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.

Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.


Read more about