Coinbase Seeks US Court’s Assistance to Compel SEC on Crypto Rule-Making
Brian Armstrong-led cryptocurrency exchange Coinbase has again called on the US justice system to persuade the Securities and Exchange Commission (SEC) to provide clear regulatory guidelines on crypto assets.
According to the centralized digital asset trading firm, the SEC’s latest enforcement action against fellow US-based crypto exchange Kraken shows its continued hesitance is a calculated gesture.
We just filed a short response to yesterday’s SEC’s “update” on our petition for rulemaking. We are grateful for the Third Circuit’s attention to this matter. pic.twitter.com/TOFfn0wWYu
— paulgrewal.eth (@iampaulgrewal) November 22, 2023
The Coinbase legal team made its position known in a direct response to the Commission’s surreply filed on November 21.
The exchange stated that the US agency’s refusal to provide information on its progress regarding possible crypto asset guidelines for the emerging industry is telling.
Additionally, the defendant argued that the agency’s commitment to submitting further status reports on December 15, 2023, clearly indicates its lack of readiness to offer the needed clarity for crypto-facing firms to operate seamlessly.
The Coinbase legal team led by Paul Grewal said that only a direct order from the Courts of Appeals could compel the SEC to take action. According to them, the agency’s fear that the Court could rule in favor of it spurred it to submit this recent surreply.
However, they asserted that it is merely a hedge and a delay tactic, emphasizing that only a mandamus would force the SEC to fully acknowledge that the exchange’s earlier requests for crypto rule-making were disregarded.
To further strengthen its objection to the dodgy performance of the regulatory body, the Coinbase legal team cited the SEC’s recent enforcement action against the Kraken exchange.
They argued that this enforcement action indicates that the SEC’s calls for more time to spell out the rules of engagement are merely a mirage, urging the Court to reject this latest gesture.
Prior to its standoff with the SEC, the US-based Coinbase exchange filed a petition to the agency’s secretary, Vanessa A. Countryman, in July 2022, requesting that a digital asset securities regulation should be mapped out by the authority.
According to the crypto exchange, the absence of a clear and workable regulatory regime in the US was worrisome and could push innovation out of the North American nation.
Given this, Coinbase asked for a workable securities guideline to prevent future friction between the nascent industry and the US government.
SEC Is the US’ Top Decel
Continuing its efforts to consolidate regulatory oversight within the crypto space, the SEC filed new complaints against the Kraken exchange.
The agency alleged that the crypto exchange commingled customers’ assets with its own and operated its expenses from a customer’s account.
Additionally, the SEC claimed that the exchange unlawfully facilitated the trading of crypto assets classified as ‘securities’ since 2018, citing potential conflicts of interest and risks to investors’ funds.
In response, the defendant expressed disappointment with the SEC’s latest enforcement action, noting that it could inadvertently impede innovation in the US, thereby damaging its competitive edge globally.
Co-founder and CEO Jesse Powell also took to X (formerly Twitter) to label the SEC as the “US’ top decel,” a term denoting something that hinders progress.
USA's top decel is back with another assault on America. The masochists haven't been happy with the beatings they've been taking in NY and are shopping for a different flavor of RegDom in CA. I thought we settled all their concerns for $30m in Feb. Now they're back for seconds? https://t.co/SkfPJyneUz
— Jesse Powell (@jespow) November 21, 2023
Powell also noted that the SEC remained unsatisfied with the $30 million settlement received from Kraken for offering crypto-staking products in the US. He concluded by saying that other crypto firms should consider leaving the US.
