The U.S. Court of Appeals for the Third Circuit upheld the SEC’s denial of Coinbase’s petition to develop a new regulatory system for cryptocurrencies “from scratch.” “The Commission’s determination that the rulemaking sought by Coinbase is currently unreasonable is reasonable and rationally explained,” the court ruled.
The appeals court agreed with the SEC’s ruling that it was unreasonable to call existing digital asset regulation “unworkable” and concluded that “the Commission reasonably denied the petition and noted that a number of proposed rules and initiatives require an entirely new regime.” We were working to resolve questions regarding the application of . existing framework for cryptocurrency asset securities,” the ruling states.
The ruling included several strong denials of Coinbase’s petition. For example, the lawsuit scoffs at Coinbase’s suggestion that courts are having difficulty applying existing law to digital asset cases, arguing that current law is sufficient to pursue such cases and that “…the courts presiding over those cases “We agree with objective justice, an assessment that cannot be reconciled with Coinbase’s protest that these executive actions are an unauthorized ‘power grab’ and an act of ‘self-aggrandizement’ by the agency,” the decision said.
A third court ruled that the SEC was right in not taking the time to write rules for cryptocurrency assets, and that Coinbase was wrong in forcing them to write rules anyway. “In the absence of a congressional mandate or threat to human health and safety (neither of which exist here), courts have rarely overturned agency rulemaking petition denials, and no one has ever done so in similar circumstances.” The economic impetus for the rulemaking petition was also insufficient, the decision wrote before saying.
Coinbase’s top lawyer, Paul Grewal, responded to the decision in a post on X. “(The court’s) default answer is: ‘No further explanation is necessary to understand the Commission’s policy decision.’ But in addition to denying their duty to explain themselves, they are rehashing the fallacy that registration is ‘executable,’” Grewal wrote. “We are confident that the court will find out what this is.”
Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.
© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.