Coinbase is taking legal action against SEC over lack of regulatory clarity

Coinbase announced on April 24, 2023 that it has filed a lawsuit in federal court. In the lawsuit, Coinbase is asking the U.S. Securities and Exchange Commission (SEC) to respond to their July 2022 petition. In this petition, Coinbase requested that the commission propose and adopt rules for the regulation of digital assets.

Legal proceedings have been initiated

Coinbase, the US cryptocurrency exchange, has legal proceedings tightened to put pressure on the U.S. Securities and Exchange Commission (SEC) about their petition of July 2022 asking for legal guidance. In an announcement on Monday, Paul Grewal, Coinbase’s Chief Legal Officer, highlighted that more than 1,700 entities and individuals have submitted comments in support of the request for clarification.

The company believes regulatory clarity in the crypto space is long overdue. Despite the securities regulator taking a slew of possible enforcement actions, crypto companies have not been briefed on how the SEC believes the law applies to their business, according to Grewal. Grewal wrote the following:

From the SEC’s public statements and enforcement activities in the crypto industry, it appears that the SEC has already decided to deny our petition. But they haven’t told the public yet. So the action Coinbase filed today simply asks the court to ask the SEC to share its decision.

The chief legal officer of the crypto company added:

It is also unusual for an agency to take enforcement action based on a legal opinion that it has not yet formally shared with the public. Again, Coinbase is not asking the court to instruct the agency how to respond. We are simply asking the court to order the SEC to respond at all, which they are required by law to do.

Coinbase recognizes need for regulation

Coinbase announced the move following a recent tweet from CEO Brian Armstrong, which stated that some of the company’s members had flown to the SEC’s Washington offices for a meeting. “Had a meeting with the SEC today. We will continue to push for a clear rulebook in the US for cryptoregs,” Armstrong wrote. “The US cannot afford to fall behind on this important technology to update the financial system.”

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The company stressed in Monday’s announcement that the legal action filed is part of a “multi-year, ongoing plea to Washington leaders for clear rules.”

Coinbase recognizes that regulation is needed and has pleaded with authorities to set guidelines for greater clarity. The company strives for “basic regulation”. While the federal court action seeks to address the impasse regarding the petition, the company said it is committed to pursuing the case to the end.

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