Following the United States Securities and Exchange Commission’s (SEC) silence over Coinbase’s recent allegations regarding how the agency is enforcing securities laws for cryptocurrencies, the Third Circuit Court of Appeals has now given the regulator a 10-day deadline to respond to these allegations.
This update was disclosed earlier today after Coinbase, the largest cryptocurrency exchange in the United States, claimed that the SEC needs to provide more regulatory guidance for crypto firms operating in the country.
The exchange demanded that the agency “at a minimum must set forth how those inapt and inapposite requirements are to be adapted to digital assets.”
Coinbase Battles With The SEC
Coinbase has been locked in a legal battle with the SEC since the regulator informed the exchange that it would sue the company over allegations that it offered unregistered securities products. Coinbase has since filed a lawsuit to prevent the SEC from taking such action.
The company referred to a petition from 2022 that called for formal rulemaking within the digital asset sector. The SEC has yet to respond to the petition, which Coinbase argues means the regulator has failed to provide a legal basis for why it has not responded.
The 10-day deadline given to the SEC requires the regulator to provide a legal basis for its lack of response to the petition.
Coinbase hopes that a successful outcome in this legal battle will help clarify the regulatory landscape for digital assets in the United States, which has been hazy, according to the company and other actors in the industry.
Notably, Coinbase has since requested the Court order to force the SEC to respond to the clarification of crypto regulations. Coinbase Chief Legal Officer Paul Grewal wrote in a blog post:
It’s essential for the SEC and any other agency petitioned for rulemaking to respond to the petition once the agency has made up its mind, especially if the answer is no. Otherwise, the public can never exercise its right to ask a court if the agency’s decision was proper.
Coinbase CEO Brian Armstrong also told CNBC, accusing the SEC of abdication of responsibility. He said:
The regulators’ job is to publish a clear rulebook and allow that market to be safe but also to flourish in that country and I think they’ve completely abdicated responsibility.
The Push For Better Crypto Regulations
Many in the crypto industry believe regulatory clarity is necessary for the sector to grow and develop. This legal battle between Coinbase and the SEC will be watched closely by many in the industry as a bellwether for how regulators approach digital assets in the future.
Coinbase is one of the biggest players in the cryptocurrency industry, with more than 56 million registered users across 100 countries. Investors and traders worldwide watch the exchange’s actions closely, and its legal battle with the SEC could have far-reaching implications for the sector.
Meanwhile, following the news, the US Court is supporting the exchange. Coinbase COIN has surged by only 1.8% in the past day.
Featured image from Unsplash, Chart from TradingView