- Coinbase filed its closing brief against the SEC with the US Court of Appeals.
- The exchange criticized the SEC for dodging making clearer rules for the crypto industry.
- Coinbase urged the US Court of Appeals to intervene and compel the SEC to establish more transparent regulations.
The US crypto industry has been in an intense multi-year battle with regulators, demanding a clearer, more solid regulatory framework. Despite relentless efforts from businesses and firms, the SEC remains adamant in squeezing the 15-year-old asset class into its century-old regulatory mold.
In response to the SEC’s unwavering anti-crypto stance, Coinbase took a bold step last year, launching a suit to force the agency’s hand to set rules for the crypto industry. Yet, despite the exchange’s arduous struggle, the SEC remains unyielding, rejecting all calls for clearer guidelines.
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On Friday, Coinbase filed its closing brief in the Third Circuit, challenging the SEC’s persistent delay in establishing regulatory clarity with a solid framework. Will Coinbase’s recent efforts finally bear fruit, especially as crypto policies become a hot-button issue for American voters?
The SEC Wants to Choke Crypto, Coinbase Complains
“The SEC’s unmistakable objective is to continue its regulation-by-enforcement campaign as long as possible, and consequently, to forgo rulemaking until its hand is forced,” Coinbase warned in its filing, emphasizing that rulemaking is necessary to prevent the SEC from causing serious harm to the industry.
The exchange accused the regulator of being intent on destroying digital assets and “choking the industry,” highlighting the necessity for the US Court of Appeals to intervene and compel the SEC to establish fair rules for the crypto sector.
In its filing, Coinbase complained that the SEC offered no rationale or reasoning for its refusal to create a clearer framework. The exchange lambasted the regulator’s approach, which includes a Catch-22 scenario: the SEC demands compliance from digital asset firms while refusing to provide the guidelines necessary for compliance.
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Coinbase’s list of complaints against the SEC in the Third Circuit carries merit. The agency is clearly against providing clearer guidelines for the crypto industry, as noted in Gary Gensler’s recent letter against the FIT21 crypto bill.
The SEC Puts Its Anti-Crypto Stance on Display
Lawmakers in the US recently passed the FIT21 Act, a groundbreaking resolution designed to clarify how digital assets are regulated by clearly defining the roles of the US CFTC and the SEC. This bill, pending a vote from the Senate and then President Biden, marks the first time Congress has taken up crypto-specific legislation.
While FIT21 aims to clarify how US regulators and investors approach crypto, SEC Chair Gary Gensler criticized it for breaking with decades-old tradition.
In his letter, The SEC chair criticized the crypto industry for not conforming to decades-old laws and regulations, dismissing their calls for a much clearer and transparent regulatory framework. He proudly asserted that “history has shown for 90 years” that the SEC’s laws build trust and “foster innovation.”
Gensler also championed the 80-year-old Howey Test, the SEC’s go-to litmus test, claiming it was perfectly suited for regulating cryptocurrencies and determining if they were securities.
However, while the SEC continues its heavy-handed approach to crypto, it’s not immune to political consequences.
US Crypto Industry’s Joint War Against the SEC
Lawmakers, businesses, and firms nationwide are banding together to challenge the SEC’s hostile regulatory approach to crypto. Coinbase has even launched a political campaign against the current SEC cohort, pledging support to pro-crypto politicians through campaign donations.
The SEC has also found itself in Congress’ crosshairs, with lawmakers successfully passing two resolutions. On May 9, Congress overturned the SEC’s SAB121 crypto accounting guidance, which aimed to change how firms handle crypto customers. Then, on May 22, the House approved the FIT21 Act, a major move to transfer regulatory oversight of cryptocurrencies from the SEC to the CFTC.
This consistent targeting prompted President Joe Biden to step in and shield the SEC by vetoing one of the bills. He declared, “My Administration will not support measures that jeopardize the well-being of consumers and investors.”
Should the SEC continue its regulation-by-enforcement approach, it could cost the current administration another chance at the White House, especially as crypto becomes increasingly relevant for US voters. A recent survey revealed that many Americans are closely watching the industry amid rising inflation, contemplating whether now is the time to invest.
On the Flipside
- Mark Cuban and Charles Hoskinson, among other influential figures in the crypto industry, assert that President Biden’s anti-crypto stance could cost him the White House.
- Last year, the SEC denied Robinhood’s request for clearer regulatory rules for crypto.
Why This Matters
The US crypto industry is turning up the heat on the SEC. Coinbase’s appeal could be a game-changer, potentially forcing the SEC to finally set clear guidelines for the crypto sector, a move the agency has been dodging for years.
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