Coinbase Accuses U.S. SEC of Breaking the Law in Rejecting Crypto Rulemaking
Coinbase has filed an action against the Securities and Exchange Commission (SEC) for allegedly breaking the law by refusing to rule to clarify oversight of the crypto industry. The company had petitioned for clear rules on digital assets, which the SEC rejected in December.
Coinbase's lawyers argue that the SEC has acted arbitrarily and capriciously when it claims authority over crypto assets while also declining to write new regulations on how those assets should be treated. Instead, the agency steered its oversight of digital assets through its enforcement actions.
When the SEC rejected the Coinbase petition in December, it didn't offer much of an explanation for why it wouldn't write crypto-specific regulations. SEC Chair Gary Gensler argued that the regulator has been working on crypto rules, even if they are not the rules the industry wants, and that "it is important to maintain commission discretion in setting its own rulemaking priorities." Coinbase's chief legal officer, Paul Grewal, posted Monday on X that the SEC owes the public an explanation and a chance to weigh in on how it's using its powers.
The company's lawsuit aims to force that answer. The SEC demands that the industry comply with inapplicable, inapt, and still-evolving securities-law requirements or else join the many companies now facing enforcement actions, including Coinbase. However, the SEC refuses to conduct the rulemaking needed to set stable standards, show how compliance with those irrelevant requirements is even possible, and provide a path to do so.
While this week's legal challenge contends the regulator has failed to properly regulate crypto, it's not directly tied to Coinbase's epic court fight with the SEC that could eventually help steer the course of the treatment of crypto exchanges under U.S. securities law. An official for the SEC declined to comment on the new suit.
Source: Coindesk
