A judge ruled this week that the United States Securities and Exchange Commission (SEC) must issue a formal response to a legal request by Coinbase seeking greater regulatory clarity for the cryptocurrency industry.
In April, the San Francisco-based cryptocurrency exchange filed a lawsuit against the SEC demanding that the agency respond to a previous request to establish new industry-specific rules, or failing that, clarify how existing securities laws apply. to digital currencies.
Coinbase had initially filed the application in 2022, arguing that the body has provided insufficient regulatory guidance for companies operating in the cryptocurrency sector. At the time, he stated that the Commission must “at a minimum, establish how those inadequate and inappropriate requirements will be adapted to digital assets.”
US Court Orders Formal Response The US Court of Appeals for the Third Circuit this week ordered the SEC to respond to such a petition, Paul Grewal, Coinbase’s chief legal officer, revealed in a series of tweets on Wednesday.
By order of the judge, the federal agency must indicate within 7 days whether it intends to deny Coinbase’s application, the reasons for such a decision, or a timeline of when a decision is expected to be made.
A United States court had already ordered the SEC to respond to the exchange’s legal action in early May. A few weeks later, the regulator filed a request to dismiss Coinbase’s petition. In that document, the regulator reiterated that there are rules applicable to cryptocurrencies, although it did not rule out the possibility of establishing new rules specific to the emerging industry.
This latest court order comes amid an SEC lawsuit against Coinbase. Regulators this week accused the exchange of violating federal law by offering unregistered securities to investors. The lawsuit came a day after a similar action against Binance, the largest cryptocurrency exchange.
SEC should set clear rules before prosecuting crypto firms in his comments on Wednesday, Grewal noted that rulemaking or clarification of existing rules by the SEC should “precede enforcement actions,” referring to in the context of these claims.
“We continue to believe that the SEC could not be proceeding with enforcement actions against our industry, such as the case filed against us today, if the SEC had not already decided to deny our request for regulation,” he said.
(Reference image source: PiggyBank, Unsplash)