Regulation
Coinbase Slams SEC in Final Brief for Refusal to Provide Clear Regulation
Coinbase filed a closing brief with the U.S. Court of Appeals for the Third Circuit on May 31, challenging the SEC’s denial of its rulemaking petition.
The case revolves around a single conclusive sentence in the SEC’s order, which “disagrees” with Coinbase’s assertion that the SEC’s current rules are unworkable for digital asset companies.
The exchange argues that this lack of reasoned decision making should result in the regulator’s order being set aside. Additionally, Coinbase wants the court to mandate the SEC to participate in rulemaking for the crypto industry.
Coinbase General Counsel Paul Grewal underlined the importance of this legal battle on social networks and criticized the SEC for offering no substantive reasoning behind its disagreement. He said:
“The SEC’s order must be vacated on this basic ground alone.”
Grewal highlighted the broader implications of the SEC’s position, saying the SEC is overstepping its jurisdiction without clear authorization from Congress and without establishing clear rules for the booming digital assets sector.
Refusal to provide rules
Grewal also expressed concerns about the SEC’s approach, accusing the agency of trying to stifle the digital assets industry. He said:
“The SEC is determined to stifle the digital assets industry and refuses to provide the necessary rules the industry has requested in order to tighten the squeeze.”
This sentiment is echoed in Coinbase’s legal brief, which claims the SEC’s actions are part of a deliberate effort to destroy an industry through enforcement. unworkable regulations.
The brief filed by Coinbase claims that the SEC’s failure to develop appropriate rules violates the Administrative Procedure Act (APA), which requires agencies to engage in rulemaking for major policy changes.
Coinbase argues that the SEC’s policies on digital assets are inconsistent and lack consistent legal standards, making compliance impossible for industry participants. The brief states:
“The SEC’s position has changed dramatically and continually, creating uncertainty and confusion.”
The filing also highlights the agency’s conflicting statements over the years and its aggressive enforcement actions, which have targeted only a subset of digital assets without clear direction.
Untenable situation
Coinbase’s legal team argued that the SEC must engage in rule-making establish clear and achievable standards for digital asset companies.
The brief emphasizes that the SEC’s current position effectively renders the entire digital assets industry out of compliance with existing rules, an “untenable and unfair” situation.
The case has attracted attention from the crypto community and regulatory watchers because it could have far-reaching implications for the regulation of digital assets in the United States.
Coinbase’s challenge illustrates the ongoing tension between the digital assets industry and regulators, as the industry seeks clarity and fair treatment under the law.
The Third Circuit’s decision on this issue will be closely watched, as it has the potential to shape the future of digital asset regulation and determine the extent of the SEC’s authority over the sector.