Coinbase has taken another step towards seeking regulatory clarity from the US Securities and Exchange Commission (SEC) for the crypto industry. In July 2022, Coinbase filed a petition asking the SEC to use its formal rulemaking process to provide guidance for the crypto industry. According to Coinbase, more than 1,700 entities and individuals have submitted comments echoing the request for clarity.
However, Coinbase has not received any response from the SEC regarding the petition, and it seems like the agency has already made up its mind to deny the request. Therefore, Coinbase has filed a narrow action in federal court, asking the SEC to respond to its petition with a yes or no answer. The Administrative Procedure Act requires the SEC to respond to Coinbase’s rulemaking petition “within a reasonable time.”
Coinbase’s action does not ask the court to instruct the agency how to respond. Instead, it requests that the court orders the SEC to respond at all, which they are legally obligated to do. Coinbase believes that regulatory clarity is overdue for the industry, and until the crypto industry gets that clarity, they will continue to take every step available to seek it.
Coinbase’s decision to move forward with the legal challenge reflects the company’s multi-year plea to Washington for clear rules of the road. The company recognizes that rules are needed and has asked for them to be developed. The company believes that its action is a small but important part of its obligation to seek regulatory clarity for the industry.
Coinbase’s move comes amid growing concerns about the regulatory environment for cryptocurrencies in the US. The company believes that the disjointed, regulation-by-enforcement approach adopted by government leaders and regulators has the potential to negatively impact American competitiveness and national security. Coinbase wants to work with regulators to update the financial system by building trusted products that expand the utility and adoption of crypto.
In conclusion, Coinbase’s legal challenge is a significant step towards seeking regulatory clarity for the crypto industry. The action highlights the urgent need for clear rules of the road that will provide much-needed guidance for industry players, customers, shareholders, and employees. The move also reflects Coinbase’s commitment to work with regulators to update the financial system and increase economic freedom and opportunity around the world.
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