The SEC has responded to Coinbase’s request for clarity regarding crypto regulation and refuses to entertain the exchange’s demands.
The United States Securities and Exchange Commission (SEC) refuses to give in to Coinbase’s request for immediate clarity of cryptocurrency regulations. On May 15, the SEC filed a brief in response to Coinbase’s petition in April and said it is not prepared to provide clarity on current crypto regulations.
The agency argued it is under no obligation to meet the requirements set out in Coinbase’s petition. It said the exchange requested complex rulemaking in an unreasonably short amount of time.
The SEC asked the court to deny Coinbase’s petition for mandamus, arguing that it is an “extraordinary remedy” that Coinbase does not, and cannot, demonstrate a right to relief. The agency added that it is under no obligation to respond to or regulate crypto:
Neither the securities laws nor the Administrative Procedure Act (“APA”) impose on the Securities and Exchange Commission an obligation to issue the broad new regulations regarding “digital assets” Coinbase has requested.
Coinbase Demands Clarity From the SEC
Coinbase filed a narrow action on April 24, compelling the securities regulator to give a ‘yes or no’ answer to a petition filed in July 2022, which went unanswered for nine months.
The 2022 petition outlines a list of questions seeking clarity on the nature of securities and how the SEC determines whether an asset is a security. Coinbase filed a previous petition on March 20 requesting the agency exclude staking from its list of securities.
SEC Argues New Regulations Are Not Needed
The SEC argued that new regulations are unnecessary as it deems digital assets securities. In its filing, the agency said:
The rulemaking petition as to which Coinbase seeks an immediate determination asks the Commission to take a series of discretionary actions to replace existing applicable securities laws and regulations with a comprehensive new regulatory regime for the trading of crypto assets that are securities.
In a Twitter thread early this morning, Paul Grewal, Coinbase’s chief legal officer, said the filing might be the first time the SEC explains its views on whether the agency should create rules for the cryptocurrency industry. Grewal notes that there is still much left that needs clarification.
Today the SEC responded to Coinbase’s petition for a writ of mandamus — asking the court to require the SEC to respond just yes or no to whether it will undertake rulemaking for our industry. The SEC’s answer? A resounding maybe. 1/7
— paulgrewal.eth (@iampaulgrewal) May 16, 2023
Grewal explained the SEC told the court that rulemaking may take years to conclude and the agency is in no rush. He added:
The SEC acknowledged that it will continue to use enforcement actions as a substitute for rulemaking for the foreseeable future, but not to worry — those enforcement actions may eventually ‘inform’ not-yet-planned rulemaking.
Chairman Gensler Stands Firm: The Rules Already Exist
The agency’s lack of willingness to engage with Coinbase’s previous petitions and its response to the latest action conveys that Gary Gensler, chairman of the SEC, and his team are not interested in cooperating with cryptocurrency firms.
Chairman Gensler spoke at the Financial Markets Conference yesterday on May 15, responding to questions regarding the row between Coinbase and the SEC. Gensler said:
The rules have already been published.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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