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The U.S. Securities and Exchange Commission (SEC) has asked a court to reject Coinbase’s petition to develop a new regulatory system for cryptocurrencies.
coinbase In a March report, regulators claimed they “lack the legal authority” to extend existing securities regimes to cryptocurrency assets, adding that they were “proceeding without congressional approval” and were “seizing power through enforcement action.” . The cryptocurrency exchange argued that any decision to expand the existing securities regime “must be made and implemented through prospective rulemaking.”
In a filing Friday with the U.S. Court of Appeals for the Third Circuit, the SEC’s lawyers rejected Coinbase’s argument that existing rules are “unworkable” and that a new regulatory framework must be developed “from scratch.”
The regulator argued that its “progressive approach” of applying the existing regulatory framework to crypto-asset securities is “reasonable and within the Commission’s discretion.”
in post Paul Grewal, Coinbase’s chief legal officer, called the SEC’s assertion on Twitter that the current registration process is “workable” an “error” and said the exchange was “confident the court will see it for what it is.” ‘I do it,’ he added.
A bedtime drink on this busy day. @SECGov We also filed a response to the Third Circuit APA challenge denying notice and comment rulemaking. Their basic answer is: “No further explanation is needed to understand the Committee’s policy decisions.”…
– paulgrewal.eth (@iampaulgrewal) May 11, 2024
The SEC and Coinbase allege the regulator sued the cryptocurrency exchange in June 2023, alleging that the cryptocurrency exchange did not register as an exchange, clearinghouse and broker despite providing these services to investors and trading unregistered securities through staking. There has been a confrontation, claiming that they provided and sold . service.
Coinbase countered the charges, arguing that tokens listed on the exchange do not qualify as securities under the so-called “investment contract” standard.
The exchange has waged an aggressive campaign through court filings and public statements to fight the SEC’s “regulation by enforcement” approach, calling for “new legislation and rulemaking” to govern the cryptocurrency sector.
Coinbase also began attracting cryptocurrency-friendly political candidates, donating $21.5 million to the Fairshake super PAC. In a tweet earlier this month, Grewal said his support for the PAC was prompted by the SEC’s “litigation campaign” and called for the election of a pro-crypto candidate who “understands the need for clear rules.”
Despite Coinbase’s best efforts, the SEC’s lawsuit against the exchange continues to intensify. In late March, the federal judge overseeing the case ruled that the regulator’s arguments against the cryptocurrency exchange were generally “well-founded” and should proceed, denying Coinbase’s motion to dismiss the case outright.
