After the SEC’s silence on Coinbase’s recent allegations regarding how the agency enforces cryptocurrency securities laws, the Third Circuit Court of Appeals has now given the regulator 10 days to respond to the allegations.
The update was revealed earlier today after Coinbase, the largest cryptocurrency exchange in the US, claimed that the US Securities and Exchange Commission needed to provide more regulatory guidance to crypto companies operating in the country.
The exchange demanded that the agency “at least determine how these inappropriate and inappropriate requirements can be adapted to digital assets.”
Coinbase battles with the SEC
Coinbase has been locked in a legal battle with the Securities and Exchange Commission 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 cited a petition from 2022 that called for formal rules in the digital asset sector. The SEC has not yet responded to the petition, which Coinbase argues means the regulator failed to provide a legal basis for why it did not respond.
The 10-day deadline granted to the SEC requires the regulator to provide a legal basis for not responding to the petition.
Coinbase hopes that a successful outcome in this legal battle will help clear up the regulatory landscape for digital assets in the United States, which has been hazy, according to the company and other players in the industry.
Notably, Coinbase has since requested the court order To force the SEC to respond by clarifying crypto regulations. Coinbase’s chief legal officer Paul Grewal wrote in a post blog post:
It is imperative that the SEC and any other rule-setting agency file a rule-making petition to respond to the petition once the agency has made its decision, especially if the answer is no. Otherwise, the public can never exercise its right to ask the court whether the agency’s decision is appropriate.
Coinbase CEO Brian Armstrong, too Tell CNBC is accusing the SEC of waiving responsibility. He said:
The job of the regulators is to publish a clear rule book and allow the market to be safe but also to thrive in that country and I think they have completely abdicated their responsibility.
Pushing for better cryptocurrency regulations
Many in the crypto industry believe that regulatory clarity is essential for the sector to grow and develop. This legal battle between Coinbase and the SEC will be closely watched by many in the industry as a forerunner of how regulators will deal with digital assets in the future.
Coinbase is one of the largest players in the cryptocurrency industry, with more than 56 million registered users in 100 countries. Investors and traders around the world are watching the stock exchange’s actions closely, and its legal battle with the Securities and Exchange Commission could have far-reaching implications for the sector.
Meanwhile, after this news, the US court supports the exchange. Coinbase COIN is up just 1.8% in the past day.
Featured image from Unsplash, chart from TradingView
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