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.
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."
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
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.