The legal tensions between Coinbase and the US Securities and Exchange Commission (SEC) have gained another angle, with the crypto exchange accusing the SEC of regulatory ambiguity and arbitrary enforcement practices.
Coinbase Challenges SEC's Denial
Leading crypto exchange Coinbase has escalated its legal dispute with the SEC by filing an opening brief to the Third Circuit Court of Appeals. This move is aimed at challenging the SEC's denial of Coinbase's petition for crypto-specific rulemaking and urging the initiation of a comprehensive regulatory process.
The lawyers presented,
“The SEC lacks statutory authority to extend the existing securities regime to digital assets. But, if the SEC insists on plowing ahead without congressional authorization, that decision must be made and implemented through prospective rulemaking.”
In its filing, Coinbase accuses the SEC of violating the Administrative Procedures Act by rejecting the exchange's petition without providing adequate justification. The exchange contends that the SEC's actions demand compliance with ambiguous securities laws without offering clear guidelines or a pathway to compliance.
Lack of Regulatory Clarity
Lawyers representing Coinbase argue that the SEC's enforcement actions lack a coherent regulatory framework for digital assets. They assert that the absence of specific regulations places undue burdens on crypto firms, compelling them to adhere to undefined rules.
Coinbase asserts that the SEC's refusal to conduct rulemaking exacerbates the ambiguity surrounding regulatory compliance in the crypto industry.
The filing from Coinbase reads,
"The SEC demands that the industry comply with inapplicable, inapt and still-evolving securities-law requirements or else join the many companies now facing enforcement actions – including Coinbase. Yet the SEC refuses to conduct the rulemaking needed to set stable standards, to show how it believes compliance with those irrelevant requirements is even possible and to provide a path to do so."
Legal Battle Unfolds
The legal confrontation between Coinbase and the SEC began when Coinbase initially requested guidance from the SEC in July 2022. Following the agency's denial of Coinbase's petition in December, the exchange took legal action, prompting the recent filing with the Third Circuit Court of Appeals.
The SEC rejected Coinbase's petition, maintaining that existing financial regulations adequately cover crypto assets. Despite criticism from Coinbase and others in the industry, SEC Chair Gary Gensler defended the agency's stance, emphasizing its discretion in setting regulatory priorities.
Coinbase's legal challenge against the SEC underscores the growing tension between regulatory authorities and crypto firms.
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.
