Coinbase filed a petition to compel the U.S. Securities and Exchange Commission to respond to a months-old petition that asks whether the securities regulator would allow the industry to be regulated using existing SEC frameworks, the exchange firm said on Monday, escalating its tensions with the regulator that has increased enforcement actions and warnings against crypto firms, including the American giant.
Coinbase petitioned the SEC to “propose and adopt rules to govern the regulation of securities offered and traded via digitally native methods” in July 2022. SEC ignored the petition.
“The rulemaking process allows agencies to develop regulation with public input and be judged by the courts. In a blog post, Coinbase chief legal officer Paul Grewal stated that more than 1,700 companies and people have commented on the petition requesting clarity.
Grewal claimed that the SEC’s public pronouncements and crypto enforcement action indicate that the agency had already decided to refuse Coinbase’s petition, “but they haven’t told the public yet.”
The petition, filed in the U.S. Court of Appeals for the Third Circuit on Monday, is the latest opposition the SEC has gotten in recent months as it pursues lawsuits against crypto businesses Bittrex, Gemini, Genesis, and entrepreneurs like Justin Sun and Do Kwon.
The SEC threatened to sue Coinbase for its goods last month. Coinbase is the gold standard for crypto exchange compliance, but it has suffered over the years since it couldn’t expand and roll out new products due to legal uncertainty while its rivals scaled in other markets.
Coinbase co-founder and CEO Brian Armstrong has indicated the exchange may move its headquarters abroad unless regulation changes. “Anything is on the table, including relocating or whatever is necessary,” he stated last week.
Coinbase takes lawsuits seriously, especially when it involves a regulator. Our sector needs regulatory certainty. Yet Coinbase and other crypto startups are facing possible SEC regulatory enforcement proceedings, even though we have not been notified how the SEC feels the law relates to our business,” Grewal wrote.