- The SEC has responded to Coinbase’s rulemaking petition, arguing it has no merit.
- The SEC’s letter said there is no statutory or regulatory deadline for considering petitions.
- Agencies regularly enforce existing laws while considering potential regulatory changes.
Coinbase’s legal battle for regulatory clarity with the Securities and Exchange Commission (SEC) is slowly progressing. Compelled by the courts, SEC responded to the exchange’s rulemaking petition. However, the response was not what Coinbase anticipated.
On Thursday, June 13, the SEC rebuked Coinbase’s request to clarify crypto asset securities urgently. Instead, the agency stated that they would likely have a recommendation within the next 120 days.
SEC Response to Coinbase’s Petition
In July 2022, Coinbase filed a petition urging the SEC to clarify its process for classifying crypto asset securities. The SEC, however, did not provide a direct response, leading Coinbase to escalate the matter to court in April 2023. The court has now ordered the SEC to clarify its position within seven days or provide a timeline for its decision.
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In response to the court’s order, the SEC submitted a letter on June 13, 2023. The agency argued against Coinbase’s request for a writ of mandamus to compel the Commission to act and clarify its stance. The SEC claimed it has not yet decided how to respond to the petition, due to its scope. Moreover, the agency pointed out that the exchange filed the petition months ago, supplemented by Coinbase more recently.
The SEC also stated that it anticipates being able to make a recommendation regarding Coinbase’s rulemaking petition within the next 120 days and can provide the Court with a status report at the expiration of that period by October 11, 2023.
The SEC’s Arguments
The SEC’s letter to the court outlined several key arguments. First, the SEC argued that there is no merit to Coinbase’s request for a writ of mandamus, as the Commission has not yet decided what action to take on Coinbase’s rulemaking petition.
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Second, the SEC contended that Coinbase’s request for the court to retain jurisdiction and require the Commission to state when it will act on Coinbase’s rulemaking petition and regularly update the Court on its progress has no basis. The SEC argued that while Coinbase might prefer faster action by the Commission, the Commission’s ongoing consideration is reasonable under the circumstances.
Third, the SEC stated that it has not decided to deny Coinbase’s rulemaking petition. The SEC clarified that its enforcement actions and statements by the Commission’s Chair do not demonstrate a decision to deny Coinbase’s rulemaking petition.
Finally, the SEC argued that there is no statutory or regulatory deadline for the Commission’s consideration of Coinbase’s rulemaking petition. The SEC added that agencies regularly enforce existing, applicable laws while simultaneously considering policy justifications for modifying those regulations in the future.
On the Flipside
- The SEC continues to maintain that the current regulatory framework is sufficient when it comes to regulating crypto.
- The SEC filed a lawsuit against Coinbase on June 6, just one day after a separate lawsuit against its competitor Binance. The agency alleges that Coinbase ran an unregistered securities exchange in the US.
Why This Matters
Coinbase’s ongoing legal battle with the SEC on crypto rulemaking will likely set a precedent for the future of crypto regulation.
Read more about Coinbase’s petition to the SEC:
Will Coinbase’s Lawsuit Against the SEC Affect Its Ongoing Enforcement?
Read more about Apple’s conflict with decentralized apps:
