Coinbase Files Petition Seeking Clarity on Crypto Regulation from SEC

Coinbase Files Petition Seeking Clarity on Crypto Regulation from SEC

Coinbase announced on April 24, 2023, that it has filed a petition in federal court requesting the US Securities and Exchange Commission (SEC) to respond to their petition submitted in July 2022, requesting the commission to propose and adopt rules governing the regulation of digital assets.

Petition for Digital Asset Regulation

Cryptocurrency exchange Coinbase has filed a court action to press the US Securities and Exchange Commission (SEC) on its July 2022 petition requesting for regulatory guidance on digital assets. The chief legal officer of Coinbase, Paul Grewal, announced on Monday that over 1,700 entities and individuals have submitted comments in support of the request for clarity.

The company believes that regulatory clarity in the crypto space is long overdue. The securities regulator has been initiating a slew of regulatory enforcement actions, but crypto firms have not been notified of how the SEC believes the law applies to their business.

"The SEC’s public statements and enforcement activity in the crypto industry seem like the SEC has already made up its mind to deny our petition. But they have not informed the public yet. So the action that Coinbase filed today requests the court to ask the SEC for sharing its decision," stated Grewal.

The chief legal officer added:

"It is also unusual for an agency to bring enforcement actions based on a view of the law that has not been shared with the public formally. Coinbase is not asking the court to instruct the agency on how to respond. We are simply requesting the Court to order the SEC to respond, which they are legally obligated to do."

Coinbase Pushes for "Basic Rulemaking"

The Coinbase CEO recently tweeted that a few members of the company flew to the SEC offices in Washington. "I met with the SEC today. We’ll continue pushing for a clear rule book in the US for crypto," Brian Armstrong wrote. "The US can’t afford to fall behind on this important technology to update the financial system."

The firm noted in its Monday announcement that the legal action filed is part of a "multi-year, continual plea to leaders in Washington for clear rules of the road." Coinbase acknowledges that regulations are necessary and highlights how the company has implored authorities to establish such guidelines for better clarity. Coinbase seeks "basic rulemaking," and while the federal court action seeks to address the impasse regarding the petition, the company said it will pursue it till the end.

What is your take on the legal battle between Coinbase and the SEC for clear regulatory guidelines in the crypto industry? Please post your comments.