SEC Rejects Coinbase Petition for Immediate Crypto Regulations
Coinbase’s chief legal officer, Paul Grewal, has expressed his concerns over the SEC’s response, asserting that they will happily continue overseeing the sector via regulation as enforcement.
The U.S. Securities Exchange Commission (SEC) has finally given a formal response in court in relation to Coinbase’s petition for clear crypto regulation. According to court documents filed on May 15, the SEC argued that it is under no obligation to meet the requirements of Coinbase outlined in its petition. The SEC also stated that any rulemaking may take years and that enforcement actions will continue in the meantime.
The securities regulator has asked the court to deny Coinbase’s petition for mandamus, arguing that mandamus is an “extraordinary remedy” and that Coinbase “does not and cannot demonstrate a right” to relief. The SEC claims that Coinbase has called for a complex set of reforms and rule-making in an unreasonably short amount of time.
Only hours before the filing, SEC chief Gary Gensler delivered a keynote speech at the Financial Markets Conference, arguing that rules for crypto were already published and were sufficient.
Interestingly, SEC, in its recent filing, distanced itself from any public comments and views of its chair, though it appears to be more in relation to comments regarding Gensler’s views that most of crypto is classified as a security.
“The SEC also said that the public statements by Chair Gensler are not formal guidance or policy statements from the SEC, and the public cannot rely on them as such,” highlighted Grewal.
The regulator has argued that it should not be compelled into rule-making for the crypto industry. The SEC stated, “Neither the securities laws nor the Administrative Procedure Act impose on the Securities and Exchange Commission an obligation to issue the broad new regulations regarding ‘digital assets’ Coinbase has requested.” The SEC emphasized that considering the various paths suggested by Coinbase is a complicated endeavor, and the agency needs more time to evaluate the matter.
Part of the SEC’s argument for seeking the denial is based on the assertion that Coinbase “cannot persuasively claim” that there has been any harm made by the SEC by not acting on the petition since it was initially filed. The SEC also argues that its recent enforcement actions on the crypto sector do not indicate “a Commission decision not to engage in rulemaking.” The agency states that it continues to consider Coinbase’s petition in the ordinary course.
“Overall, the SEC’s response reinforces Coinbase’s longstanding concern that our industry does not have clarity on what the SEC may consider to be within or outside its jurisdiction at any time, and it is likely to continue changing its mind along the way,” argued Grewal.