Coinbase has filed a suit
against the Securities and Exchange Commission (SEC ) for failing to respond to
its July 2022 petition that asked the US securities watchdog to provide
guidance for the cryptocurrency industry using its formal rulemaking process.
The crypto exchange disclosed the suit on Monday, noting that it simply
requested that the federal court “ask the SEC to share its decision” on the
petition.
Today, we filed a narrow action in the U.S. Circuit Court to compel the SEC to respond “yes or no” to a rulemaking petition we filed with them last July asking them to provide regulatory guidance for the crypto industry. 1/4 https://t.co/rlsS1DIFfl
— paulgrewal.eth (@iampaulgrewal) April 25, 2023
In the petition, Coinbase asked that the SEC “propose and adopt
rules to govern the regulation of securities that are offered and traded via
digitally native methods [such as crypto exchanges], including potential rules to identify which digital
assets are securities.” In a blog post published on Monday, the crypto exchange further noted that the petition has generated over 1,700 submitted comments from entities and
individuals, “echoing the request for clarity.”
“The rulemaking process is a
critical step to giving the public notice about what activities they can and
cannot engage in,” Paul Grewal, Coinbase’s Chief Legal Officer, explained in
the blog post. “So until the crypto industry gets that clarity, we will
continue to take every step available to us to seek it, which includes today’s
filing.”
Coinbase’s suit comes a month
after the largest US crypto exchange got a Wells notice from the SEC, stating that it has been violating
the US securities law by offering unregistered securities. Reacting, Grewal
faulted the notice, noting that the securities watchdog previously declined the exchange’s request to
state which specific assets on its platform it considers to be securities.
Coinbase received a Wells notice from the SEC. After years of asking for reasonable crypto rules, we’re disappointed that the SEC is considering courts over constructive dialogue. But if courts are required, so be it. We’ll defend the rule of law. 1/15 https://t.co/MXpc0RhNj4
— paulgrewal.eth (@iampaulgrewal) March 22, 2023
In recent months, the SEC has
also doubled down on its enforcement actions against crypto executives,
exchanges and lenders, noting that their crypto offerings were unregistered
securities. Executives such as TRON Founder Justin Sun and Terraform Labs and CEO Do Kwon as well as platforms such as Kraken, Gemini and Genesis, are all facing regulatory pressure in this
regard.
In the context of these developments, Grewal noted that Coinbase and
other crypto firms face potential regulatory enforcement actions
from the SEC despite not knowing which of the agency’s existing securities
law applies to their businesses.
“From the SEC’s public
statements and enforcement activity in the crypto industry, it seems like the
SEC has already made up its mind to deny our petition. But they haven’t told
the public yet,” Grewal said, adding that “regulatory clarity is overdue for
our industry.”
Coinbase has filed a suit
against the Securities and Exchange Commission (SEC ) for failing to respond to
its July 2022 petition that asked the US securities watchdog to provide
guidance for the cryptocurrency industry using its formal rulemaking process.
The crypto exchange disclosed the suit on Monday, noting that it simply
requested that the federal court “ask the SEC to share its decision” on the
petition.
Today, we filed a narrow action in the U.S. Circuit Court to compel the SEC to respond “yes or no” to a rulemaking petition we filed with them last July asking them to provide regulatory guidance for the crypto industry. 1/4 https://t.co/rlsS1DIFfl
— paulgrewal.eth (@iampaulgrewal) April 25, 2023
In the petition, Coinbase asked that the SEC “propose and adopt
rules to govern the regulation of securities that are offered and traded via
digitally native methods [such as crypto exchanges], including potential rules to identify which digital
assets are securities.” In a blog post published on Monday, the crypto exchange further noted that the petition has generated over 1,700 submitted comments from entities and
individuals, “echoing the request for clarity.”
“The rulemaking process is a
critical step to giving the public notice about what activities they can and
cannot engage in,” Paul Grewal, Coinbase’s Chief Legal Officer, explained in
the blog post. “So until the crypto industry gets that clarity, we will
continue to take every step available to us to seek it, which includes today’s
filing.”
Coinbase’s suit comes a month
after the largest US crypto exchange got a Wells notice from the SEC, stating that it has been violating
the US securities law by offering unregistered securities. Reacting, Grewal
faulted the notice, noting that the securities watchdog previously declined the exchange’s request to
state which specific assets on its platform it considers to be securities.
Coinbase received a Wells notice from the SEC. After years of asking for reasonable crypto rules, we’re disappointed that the SEC is considering courts over constructive dialogue. But if courts are required, so be it. We’ll defend the rule of law. 1/15 https://t.co/MXpc0RhNj4
— paulgrewal.eth (@iampaulgrewal) March 22, 2023
In recent months, the SEC has
also doubled down on its enforcement actions against crypto executives,
exchanges and lenders, noting that their crypto offerings were unregistered
securities. Executives such as TRON Founder Justin Sun and Terraform Labs and CEO Do Kwon as well as platforms such as Kraken, Gemini and Genesis, are all facing regulatory pressure in this
regard.
In the context of these developments, Grewal noted that Coinbase and
other crypto firms face potential regulatory enforcement actions
from the SEC despite not knowing which of the agency’s existing securities
law applies to their businesses.
“From the SEC’s public
statements and enforcement activity in the crypto industry, it seems like the
SEC has already made up its mind to deny our petition. But they haven’t told
the public yet,” Grewal said, adding that “regulatory clarity is overdue for
our industry.”