Coinbase sues SEC asking for clarity on crypto regulations in the U.S.

• Coinbase has petitioned a U.S. federal court to compel the SEC to provide clarity regarding crypto regulations.
• The exchange has asked the court to get the regulatory body to respond to its petition filed last year that requests formal rulemaking in the digital assets industry.

Cryptocurrency exchange Coinbase has petitioned a federal court to compel the U.S. Securities and Exchange Commission (SEC) to respond to a petition it filed in July last year requesting formal rulemaking in the digital assets industry.

The exchange filed an Administrative Procedure Act appeal against the SEC yesterday (24 April), requesting that the SEC offer “regulatory clarity” on how existing securities regulations would apply to the crypto assets.

Coinbase’s July 2022 petition requested that the SEC, through its official rulemaking process, develop and approve clearer regulatory rules for the cryptocurrency business in the United States.

According to Coinbase, over 1,700 businesses and individuals have filed comments on Coinbase’s petition, reiterating the desire for regulatory clarity.

Coinbase Chief Legal Officer Paul Grewal wrote, “We are simply requesting that the Court order the SEC to respond at all, which they are legally obligated to do.”

Gentle reminder: Coinbase recently received SEC’s Wells notice

The filing reads that it is widely acknowledged, including by a sitting SEC Commissioner, that existing SEC registration and disclosure requirements are incompatible with digital assets, which differ fundamentally from the stocks, bonds, and investment contracts for which securities laws were designed and the SEC has traditionally regulated.

At the very least, the SEC must specify how many ineffective and inapplicable standards will be applied to digital assets. However, the SEC has refused to do so.

Coinbase’s complaint against the SEC comes a little over a month after the exchange received a Wells notice from the SEC, indicating that the regulatory body intended to sue the exchange for alleged violations of U.S. securities law. Coinbase is scheduled to reply to the particular charges before the end of the week.

Coinbase’s latest filing, however, is understood to be a pre-emptive move by the exchange to claim that the SEC’s strategy does not offer enough regulatory direction for American enterprises engaged in the cryptocurrency industry.