By
Kseniia Klichova
May 3rd, 2024
In the new letter filed at the US Court of Appeals for the Third Circuit, Coinbase’s legal team believes that only the court can order the SEC to do its bidding to provide a clear regulatory framework for the crypto space instead of choosing to control the industry by enforcement.
Coinbase Global Inc (NASDAQ: COIN) has once again called for urgent action from the US Securities and Exchange Commission (SEC) regarding the establishment of clear regulatory frameworks for the crypto industry.
In response to a recent letter from the SEC indicating a status report on Coinbase’s crypto rulemaking petition by December 15, the exchange filed a compelling argument in the US Court of Appeals for the Third Circuit on November 22, asking the regulator to expedite the process.
Regulatory Reluctance
The filing submitted by Coinbase’s legal team, led by its chief legal officer Paul Grewal, referenced the SEC’s recent enforcement action against Kraken, another crypto exchange, for violations of federal securities laws.
Coinbase’s legal representatives asserted that the SEC’s handling of the Kraken case, which accused the exchange of commingling customer funds and failing to register appropriately, exemplifies the regulator’s reluctance to establish regulatory clarity.
The company’s lawyer, Eugene Scalia, criticized the SEC’s stance, stating that the recent enforcement action against Kraken is further evidence that the SEC sees no need for regulatory clarity and urged the court to reject this perceived lack of commitment.
“The Kraken action was necessarily approved by the Commission and (like previously commenced suits against Coinbase and others) is further evidence that the Commission sees no need for regulatory clarity. Its course is determined, and the court should reject this latest empty gesture,” said Scalia.
In the new letter filed at the US Court of Appeals for the Third Circuit, Coinbase’s legal team believes that only the court can order the SEC to do its bidding to provide a clear regulatory framework for the crypto space instead of choosing to control the industry by enforcement.
“Only an order by this Court will make the Commission act,” Coinbase lawyer Eugene Scalia said in the letter, arguing that a recent update to the court from the SEC provided “no additional information about its progress” other than the promise of a further status report by December 15.
The statement criticized the SEC’s approach, characterizing it as a continuous effort to “hedge and delay”. The filing argued that the SEC’s promise of another status report by mid-December was insufficient and that only a court mandate would compel the SEC to address Coinbase’s petition promptly.
Coinbase Push for Regulatory Clarity
Coinbase started its push for a clear rulebook for the crypto industry in July 2022, requesting the SEC to “propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods, including potential rules to identify which digital assets are securities.”
The move follows the regulator’s enforcement action against many crypto companies, including Binance, Gemini, Coinbase, and Kraken, over allegations of operating as unregistered securities exchanges.
Earlier this year, in June, the SEC responded to Coinbase’s petition after a series of delays, indicating that it needed approximately 120 days (four months) to review and respond to Coinbase’s request for rulemaking.
However, on November 21, the Commission filed a letter with the Appeals Court, postponing its decision regarding the exchange’s request until December 15.
Meanwhile, Coinbase’s letter to the appeal court comes amidst reports that the SEC may be nearing a decision on a potential approval for Bitcoin (BTC) spot exchange-traded fund (ETF) in the United States. According to the reports, the decision holds substantial potential to profoundly increase mainstream crypto adoption globally.