Coinbase Condemns SEC and Gensler for ‘Not Conducting Rulemaking’ for Crypto

Coinbase is not backing down against the SEC which it maintains is shirking its duties.

A huge Brian Armstron statue head looking at Gery Gensler in an angry manner, whilst Gery casually leaning on him.
Created by Gabor Kovacs from DailyCoin
  • In a writ of mandamus, Coinbase has accused the SEC of not acting towards creating crypto rules.
  • Coinbase is looking for the courts to order the SEC to change its stance.
  • The SEC maintains that there are already regulations for crypto – they fall under securities law. 

The battle between the SEC and the crypto industry in the U.S. is starting to peak, with Coinbase emerging as the champion for those affected by regulators. In a new court filing, the major exchange made damaging accusations against the SEC. 

Coinbase has repeatedly sought clarity on the SEC’s mandate to create a framework for crypto regulation. However, in the latest filing to the Third Circuit of the U.S. Court of Appeals, the exchange has condemned the agency as “the SEC Chair continues to state publicly that there will be no rulemaking.”

Airing Out the Laundry

The filing falls as a writ of mandamus – a judicial remedy from a court to any government authority to do some specific act – as Coinbase continues seeking an answer for its “petition for rulemaking,” filed last July. This petition asked the agency to propose and adopt digital asset securities rules.

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Coinbase feels the writ of mandamus is warranted due to three arguments that it outlines. 

Coinbase maintains that:

  1. The SEC Chair continues to state publicly that there will be no rulemaking.
  2. The SEC’s enforcement actions confirm that it is not considering Coinbase’s petition.
  3. The SEC has ignored other crypto industry petitions for years. 

Clearly, Coinbase believes that the SEC is purposefully dragging its heels on creating formal rules and regulations rather than sticking to a process of “regulation by enforcement.” 

“Regulations Already Exist”

Despite the arguments and instances provided by Coinbase, the SEC and its Chair, Gary Gensler, are equally adamant that regulations are in place. 

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Gensler spoke at the House Appropriations Subcommittee on Financial Services and General Government on March 29, stating:

“The regulations actually already exist, sir. They’re called securities regulations, and so there are disclosure regulations for when somebody tries to raise money from the public,” Gensler said. 

This clearly outlines the SEC’s approach to crypto, where it believes almost all coins would be considered securities and thus be regulated under existing laws. 

On the Flipside

  • The battle between the SEC and Coinbase is ongoing, but it could lead to the U.S. exchange looking to other shores for its operations. 

Why This Matters

If the SEC continues to hold all cryptos to securities laws, it will be tough for crypto companies to flourish in the U.S., especially with other nations setting up friendly frameworks. 

Read more about the SEC’s pressure on Coinbase:

SEC’s Response Spurs Calls for Coinbase to Leave the U.S.

Read more about how the UK is looking to regulate crypto:

Crypto Treated Like Gambling or Stocks? UK Regulators Divided

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Darryn Pollock

Darryn Pollock is a South African-born, UK-based journalist and content writer for DailyCoin with a focus on regulation and legislation revolving around the cryptocurrency space. He has covered the evolving crypto regulatory space, and examined how the US has approached law-making to offer protection in the growth of innovation. Darryn values traditional journalistic principles of truth, accuracy, independence, fairness, and impartiality, and has a Bachelor of Arts degree in Journalism and Law from Rhodes University in South Africa.