Coinbase has submitted its last brief opposing the Securities and Exchange Commission’s (SEC) ruling that its rulemaking petition was denied. Coinbase demands more precise regulatory standards for the developing digital asset market.
The dispute started in 2022 when Coinbase formally requested the SEC to create a comprehensive regulatory framework designed especially for digital assets. The petition contended that cryptocurrencies’ dangers and special features needed to be adequately addressed by the securities regulations now in place, many of which are from the 1930s.
Coinbase pushed the SEC to draft new regulations to give businesses in this quickly changing industry much-needed clarity. The SEC, however, rejected Coinbase’s petition at the beginning of 2023, claiming that the securities laws currently in place already covered digital assets and that the present regulatory system was adequate.
SEC Insists It’s Taking the Right Approach Towards Protecting Investors
The position of the SEC has been that, depending on their characteristics, cryptocurrencies may be regarded as securities and thus come under its purview. Coinbase has also accused the SEC of a lack of rationality in its actions, stating that the details in its position are enough to drop the case.
SEC claims that a wider jurisdiction lacks clear authorization from the United States Congress, which has yet to give specific rules. According to Coinbase’s brief, the Administrative Procedure Act (APA), which sets down the guidelines for how federal agencies create and publish regulations, must be fixed by the SEC’s unwillingness to start the rulemaking process.
According to the APA, agencies must make decisions based on logic and reason, which includes carefully considering important concerns brought forth in petitions for regulation. Under its Chairman Gary Gensler, the SEC has insisted that the current regulatory structure is sufficient for supervising digital assets. Gensler has underlined on several occasions that many cryptocurrencies show traits of securities, such as investment contracts, and should be treated as such.
Coinbase Accuses SEC of Deliberately Frustrating the Cryptocurrency Industry
However, the existing regulatory ambiguity will continue if the court rules in favor of the SEC, which will probably result in more enforcement actions and court battles. According to Paul Grewal, Coinbase’s Chief Legal Officer (CLO), while addressing the development, says that Coinbase found the allegations by SEC baseless and senseless.
Coinbase, in its latest court filing, stated that most of the Catch-22 developments seen in the compliance demand by the SEC contain a broad view of its operations. SEC has launched a large litigation campaign against major cryptocurrency companies for failing to boycott the stipulated guidelines – and also failing to create its own compliance rules.
However, Coinbase has accused the SEC of deliberately frustrating the industry and dismantling the principles on which the cryptocurrency industry stands by compelling companies to meet its ridiculous demands. Coinbase, in their latest brief, accused SEC of intending to end the cryptocurrency industry in the United States.
The company said that the SEC’s response to the lawsuit proves it is out to oppress the industry. It also accused the Commission of using unsupported and inconsistent legal means to further its campaign against the cryptocurrency industry.
SEC Says More Regulations May Not Be Necessary, Coinbase Faults SEC
According to the SEC, the industry may be adequately regulated by acting against entities that break securities laws, and further regulations may be unnecessary. The Commission claims several cryptocurrency projects and exchanges have violated current securities laws and launched substantial enforcement action against them.
As contained in the Coinbase filing, anything contrary to the court’s order will only encourage the SEC to continue its prolonged attack on the cryptocurrency industry. SEC has yet to develop the required rules amid industry players’ continued demand, making it impossible to agree with federal statutes.
Coinbase insists that it will only take a court order to direct the Commission to start making rules to end lingering arbitrary actions. The company disclosed that it filed its petition for rulemaking two years ago, but the SEC is trying to drop it because of it’s inactions.