SEC Moves to Block Coinbase’s Request for Clarification in Court (Report)

Late last month, Coinbase — which was previously hit with a Wells Notice, an informal warning from the Securities and Exchange Commission (SEC) typically followed by a lawsuit — asked the courts to force the agency to spell out what actions it must take in order to remain compliant.

On the other hand, the SEC remains secretive.

A friendly discussion is preferred

According to Brian Armstrong – CEO of Coinbase – his company intends to fight the current trend of regulation through enforcement and seeks to promote cooperation and friendly discussion regarding regulation.

I spent the day in D.C. meeting with members of Congress. We need regulatory clarity in the US for the central players in crypto for many reasons – consumer protection, national security, economic growth, etc. The SEC has done untold harm to America through its policy of regulation through enforcement. We’ll fight to fix that.”

The CEO also said that the company is ready to defend itself in court but prefers not to do so and stressed that he and his exchange are open to good faith talks with regulators.

The framework is already in place, says Gensler

Despite Coinbase’s willingness to negotiate, Gary Gensler, chair of the Securities and Exchange Commission, stated in court that the existing regulation is already clear and that cryptocurrency exchanges are simply refusing to take it into account, according for bloomberg.

In contrast, Coinbase requested clear guidance for rules to be adhered to, and to present them via a notice and comment process that would allow the newly clarified rules to be publicly scrutinized.

Unfortunately for the exchange, the SEC moved to block the application in court, Mentionsed It could take years for this regulation to be set in rock.

“Coinbase’s preference for faster or different regulatory action by the Commission does not entitle it to obtain extraordinary relief from this court. The petition should be dismissed.”

Paul Grewal, Coinbase’s chief legal officer, took to Twitter to reiterate his firm’s position that the SEC does not provide clarity to the companies it regulates.

The Securities and Exchange Commission (SEC) today responded to Coinbase’s petition for an injunction — asking the court to require the SEC to answer with a yes or no on whether to set the rules for our industry. The SEC’s answer? Maybe thunderous. 1/7

– paulgrewal.eth (@iampaulgrewal) May 16, 2023

The securities regulator has stated that Gensler’s public comments should not be taken as statements of policy — though acknowledging that they may continue to use enforcement action rather than a regulatory framework until the edges are softened.

Coinbase, meanwhile, has remained firm in its stance, stating that it does not list securities. According to a company spokesperson, the exchange already takes SEC guidelines regarding securities into account when deciding which tokens to list, which leads them to reject about 90% of applications.