US Appeals Court challenges SEC’s dismissal of Coinbase’s request for crypto-specific regulations, calling the agency’s two-page rejection letter insufficient and arbitrary.
The US Court of Appeals for the Third Circuit has requested that the US SEC defend its decision to deny Coinbase’s request for specific crypto regulations, declaring provided justifications deficient.
Coinbase Wins Court Favor Amid Persisting SEC Battle
This legal battle between the US Securities and Exchange Commission and the America-based cryptocurrency exchange Coinbase started several months ago following alleged violations of securities laws.
Amid this fight, the exchange had challenged back at the regulator, asserting that the SEC has insufficient legal oversight on the case. In the quest for more clarity, Coinbase has requested the SEC issue crypto-specific rules that address the relationship between the federal securities laws and the crypto landscape, emphasizing how and when the regulations apply to digital assets.
Nonetheless, the SEC’s failure to approve Coinbase’s petition for the rules has called for the court’s intervention.
Court Demands More Clarity From SEC
On Jan 13, the judge issued rulings that partially satisfied Coinbase’s plea, as it had only demanded that the SEC provide more clarity on its decision to reject Coinbase’s petition for cryptocurrency-specific regulations.
Although the agency had issued a two-page letter rejecting the petition, the court has claimed that the letter lacked clarity and considered the SEC’s vague response to the regulatory petition “arbitrary and capricious.”
Despite several expectations, the court has yet to order the SEC to provide new rules as Coinbase requested. Hence, it is still uncertain if the crypto industry will soon receive clarified regulations that explain how digital assets should be assessed as securities.
In his rulings, Judge Thomas L. Ambro said, “We properly remand this back to the SEC to explain itself; it should not come up with yet another poor explanation in a long line of such.”
While the court made further assertions, supporting Coinbase’s concern about the SEC’s rigid actions against the crypto community, the court pointed out that the old regulations do not properly fit with the new framework featured by crypto technology. It said the SEC’s enforcement actions raise “constitutional notice concerns.”
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