Coinbase has filed a suit against the Securities and Exchange Commission (SEC), asking a court to make the regulator respond to a petition from last year on the “rules to govern the regulation” of digital assets.
Paul Grewal, Chief Legal Officer, Coinbase, said in a blog that the Company has filed an action to compel the SEC to respond “yes or no” to their July 2022 petition asking the SEC to use its formal rulemaking process to provide guidance for the crypto industry.
The Administrative Procedure Act requires the SEC to respond to Coinbase’s rulemaking petition “within a reasonable time.”
“If the SEC says no to our rulemaking petition, which it has the right to do, then Coinbase would be allowed to challenge that decision in court and explain in that formal setting why rulemaking is required,” he said.
Grewal added that it’s important 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.
“From the SEC’s public statements and enforcement activity in the crypto industry, it seems like the SEC has already made up its mind to deny our petition. But they haven’t told the public yet. So the action Coinbase filed today simply asks the court to ask the SEC to share its decision,” he wrote.
He said that Coinbase does not take any litigation lightly, especially when it relates to one of the regulators.
“Regulatory clarity is overdue for our industry,” he stressed.
Yet Coinbase and other crypto companies are facing potential regulatory enforcement actions from the SEC, Grewal said.
He added that the rulemaking process is a critical step to giving the public notice about what activities they can and cannot engage in.
“Until the crypto industry gets that clarity, we will continue to take every step available to us to seek it, which includes today’s filing. We also remain available to the SEC and all of our regulators for dialogue any time on these issues,” he said.
“We believe we have an obligation to our industry, our customers, our shareholders, and our employees to leave no stone unturned when it comes to seeking regulatory clarity in the US,” he noted.
