Coinbase Challenges SEC’s Refusal to Enact New Cryptocurrency Rules in Court
Coinbase Chief Legal Officer Paul Grewal said Friday that the cryptocurrency exchange is challenging the Securities and Exchange Commission’s move to reject calls for new digital asset regulations.
This morning, the SEC rejected Coinbase has long called for new rules, calling them “unfair.”
“Today the SEC denied Coinbase’s petition challenging its cryptocurrency rules,” Grewal said. Posted in. “After 18 months of silence, we went to court to get the response the law requires. With gratitude to the Third Circuit, today we will seek its help again by challenging the SEC’s waiver of its obligations.”
Coinbase and the SEC have been at odds since the exchange called for new rules for 2022. Grewal said: Republican SEC Commissioners Hester Peirce and Mark Uyeda disagreed with this rejection and noted the need for dialogue between regulators and the cryptocurrency industry.
“I appreciate that two commissioners disagreed with the denial and called for real dialogue,” Grewal said. “We must work together to create laws and rules that serve consumers and American innovation, not just defend lawsuits based on legal positions that change every month.”
Later Friday, Coinbase filed a petition for review with the U.S. Court of Appeals for the Third Circuit. In other words, the exchange is asking the court to evaluate whether its action to deny the SEC’s rulemaking petition was appropriate.
“Coinbase’s Mandamus petition has now achieved its stated purpose of compelling the SEC to act on Coinbase’s rulemaking request,” according to the filing. “The Commission’s formal denial of that request makes it clear that its words and actions have long been the Commission’s position. In doing so, the SEC paves the way for judicial review that has long been hampered by inexplicable inaction.”
Samsung Electronics’ actions
Although the agency has not proposed any cryptocurrency-related rules, it has proposed several rulemakings that would apply to the industry over the past year. For example, the SEC keep A rule that requires registered investment advisers to store cryptocurrency with a qualified custodian and requires that custodian to follow certain requirements.
The SEC has also taken, and is currently taking, enforcement actions over the past year, including one against Coinbase for operating as an unregistered exchange. Coinbase said the judge should throw it out. example
An important part of the SEC’s responsibility is finding ways to allocate resources, SEC Chairman Gary Gensler said Friday. He emphasized that the cryptocurrency market is small compared to other capital markets overseen by the agency.
“Cryptocurrency markets are experiencing fraud, abuse and non-compliance at an alarming rate relative to their size, but they nonetheless represent only a small portion of the $110 trillion-plus capital market. The Commission retains discretion to ensure that capital markets are subject to updated regulation. There is a need,” Gensler said.
Updated at 3:50 PM ET to include an update on Coinbase’s review petition.
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