The United States Securities and Exchange Commission has finally given a formal response in court regarding Coinbase’s request for clear regulation for cryptocurrencies, stating that any regulation can take years and that enforcement actions will continue in the meantime.
According to court documents filed on May 15, The SEC argued that it is under no obligation to comply with Coinbase’s requirements outlined in its petition, also arguing that the company has asked for a complex set of reforms and rulemaking in an unreasonably short period of time.
The securities regulator has asked the court to deny Coinbase’s injunction petition, arguing that the injunction is an “extraordinary remedy” and that Coinbase “does not have and cannot demonstrate a right” to the satisfaction of its claims.
Coinbase’s chief legal officer, Paul Grewal, said in a Twitter thread that the filing may be the first time the securities regulator has explained its views on whether the SEC should create rules for the crypto industry.. He also said that there was still a lot on the table that needed clarification.
Today the SEC responded to Coinbase’s petition for a writ of mandamus — asking the court to require the SEC to respond just yes or no to whether it will undertake rulemaking for our industry. The SEC’s answer? A resounding maybe. 1/7
— paulgrewal.eth (@iampaulgrewal) May 16, 2023
Today the SEC responded to Coinbase’s request for an injunction by asking the court to require the SEC to answer only yes or no to whether it will undertake rulemaking for our industry. The SEC’s response? A resounding “yes”. 1/7
“The SEC told the court that rulemaking can take years and they are in no rush,” he said, and I add:
“The SEC acknowledged that it will continue to use enforcement actions as a substitute for rulemaking for the foreseeable future, but not to worry: those enforcement actions may eventually ‘inform’ rulemaking not yet planned.”
Just hours before the filing, the SEC Chairman, Gary Gensler, gave a speech at the Financial Markets Conference, arguing that the rules for cryptocurrencies were already published and were sufficient.
Interestingly, in its recent filing, the SEC distanced itself from any public comment and the views of its chairman, although it seems to be more in relation to comments on Gensler’s views that most cryptocurrencies are classified as a security.
“The SEC also said that Chairman Gensler’s public statements are not formal guidance or policy statements from the SEC and cannot be relied upon as such by the public,” Grewal said.
Ultimately, the regulator has argued that it should not be forced to make rules for the cryptocurrency sector.
“Neither the securities laws nor the Administrative Procedure Act impose an obligation on the Securities and Exchange Commission to issue the sweeping new regulations relating to ‘digital assets’ that Coinbase has requested,” the SEC stated, adding that:
“As Coinbase’s own presentations make clear, considering the various avenues it suggests is a necessarily complicated task. However, Coinbase filed its rulemaking petition less than ten months ago, supplemented aspects of the petition less than three months ago, and tried to supplement the dossier again just a few weeks ago.”
Part of the SEC’s argument for requesting the denial is based on the assertion that Coinbase “cannot argue persuasively” that the SEC did any prejudice by failing to act on the request. since it was initially introduced.
Nor is the company able to prove that recent SEC enforcement actions in the cryptocurrency sector indicate “a decision by the Commission not to participate in rulemaking.”
“The Commission continues to consider Coinbase’s request in the ordinary course,” the agency said.
“Overall, the SEC’s response reinforces Coinbase’s longstanding concern that our industry is unclear on what the SEC can consider to be inside or outside its jurisdiction at any given time.and it is likely that he will continue to change his mind,” Grewal argued.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.