Coinbase described the SEC’s actions in its appeal letter as arbitrary and capricious, an abuse of discretion, and contrary to law, in violation of the Administrative Procedure Act.
Cryptocurrency exchange Coinbase Global Inc (NASDAQ: COIN) is continuing its efforts to ensure the introduction of a clear regulatory framework for cryptocurrencies in the United States. Coinbase has filed an appeal, challenging the Securities and Exchange Commission’s (SEC) decision on its petition to introduce a unified rulebook for digital assets classified as securities in the country.
SEC Rejects Coinbase’s Request for Crypto Rule
On December 15, the SEC rejected Coinbase’s request for virtual asset rules on the grounds that the petition “lacked text or the substance of any proposed rule.” According to the regulator, the textual substance is a crucial requirement for such petitions.
The financial watchdog further stated the current securities laws already apply to the crypto securities market. Therefore, there is no need to introduce separate rules to govern the emerging economy.
SEC chairman Gary Gensler disagreed with the Coinbase proposal, which claimed that the current laws are unworkable. He also said there is no evidence to support Coinbase’s claim that crypto investors and issuers should be exempted from existing securities laws.
Shortly after the SEC’s decision was made known to the public, Coinbase filed an appeal the same day, requesting the judicial review of the judgment. On Monday, December 18, the US Third District Court of Appeals instructed the SEC to submit a record of its decision by January 24, 2024 for review.
Arbitrary and Capricious
In the appeal letter, Coinbase detailed the lengthy process it took to ensure the SEC responded to its petition. On different occasions, the authorities had delayed decisions on the Coinbase petition regarding introducing a unified rulebook for cryptocurrencies. However, Coinbase pressed on, calling the agency to respond to its petition.
Coinbase described the SEC’s actions in its appeal letter as “arbitrary and capricious, an abuse of discretion, and contrary to law, in violation of the Administrative Procedure Act.” The company also said the refusal goes against the agency’s principle of fundamental fairness.
“The Commission’s refusal to engage in rulemaking, even while it continues a campaign of regulation by enforcement against Coinbase and others that exceeds its statutory authority, flouts the APA [Administrative Procedure Act] and fundamental principles of fairness it embodies,” Coinbase said.
Coinbase Unveils Pro-Crypto Policy Campaign
Coinbase started its fight for crypto rules in the United States last year. The publicly traded company filed the petition for the rejected proposal in July 2022, asking 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 SEC’s decision to regulate the crypto industry through enforcement without providing a sufficient framework to determine the issuance and usage of digital assets in the US.
In June of this year, the SEC brought a civil lawsuit against the exchange, alleging violations of several securities laws, including selling products and services without proper authorization.
In response to the government’s crackdown on cryptocurrencies, Coinbase introduced Crypto435, a grassroots political campaign that advocated for pro-crypto policies in the United States.
The initiative is focused on expanding the crypto advocacy community and Coinbase said it will provide essential tools and resources for those involved in the campaign for effective communication across all 435 congressional districts in the country.
next