An appeals court should order the U.S. Securities and Exchange Commission to begin writing rules for cryptocurrencies, Coinbase argued in its final push for rulemaking.
Cryptocurrency companies are caught in a “Catch-22,” Coinbase said in a 36-page closing briefing filed on Friday. Court of Appeals for the Third Circuit. While the SEC asked companies to comply, it also launched “scorched earth litigation against those companies for failing to do so” and refused to write rules, Coinbase said.
“This pattern of behavior is a deliberate effort to destroy an industry by demanding the impossible and prosecuting companies that fail to achieve it,” Coinbase said. short.
The agency is working to bring about major policy changes, Coinbase added.
“The SEC maintains that its position on digital assets has never changed,” the exchange said. “But that is not true, and the SEC’s evidence to the contrary is nothing more than an abstract statement that ‘facts and circumstances’ change when securities laws are applied to digital assets.”
Earlier this month, the SEC refute Coinbase called for rulemaking and said it cannot force exchanges to write new rules. The agency claimed that it was unfair. Calls existing digital asset regulation “unworkable.”
There have been calls for regulatory clarity for years.
Coinbase and the SEC have been arguing for years about the need for rulemaking. Coinbase first asked the SEC in July 2022 to issue a formal rulemaking process to “provide guidance to the cryptocurrency industry.” The SEC has not introduced cryptocurrency-specific regulations, but last year it proposed rules that would apply to cryptocurrencies. For example, the SEC has revisited its custodial rules that require registered investment advisers to store cryptocurrencies with qualified custodians who must adhere to certain requirements. Coinbase fired back Friday, calling the SEC’s rules “inadequate.”
The SEC has also taken enforcement actions against cryptocurrency platforms and projects over the past year. The agency sued Coinbase in a separate lawsuit in June for operating the platform without registering it. Meanwhile, the cryptocurrency industry While many have criticized the SEC for what they call “regulation by enforcement,” SEC Chairman Gary Gensler has argued that most cryptocurrencies are securities and should be regulated similarly to other investments.
Coinbase ultimately forced the agency to give a yes or no answer to its rulemaking petition and sued the SEC in April 2023. The SEC later rejected There have been calls for new rules, and Chairman Gensler said existing rules already apply to cryptocurrencies. Gensler also said at the time that an important part of the SEC’s responsibility was finding ways to allocate resources. He emphasized that the cryptocurrency market is small compared to other capital markets overseen by the agency.
The SEC declined to comment.
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