Coinbase sues SEC to compel a response to its rulemaking petition

Coinbase has filed a lawsuit to obtain a response from the SEC to the petition it filed in July 2022. The petition sought clarity on the regulation of the crypto industry.

Today, we filed a narrow action in the U.S. Circuit Court to compel the SEC to respond ‘yes or no’ to a rulemaking petition we filed with them last July asking them to provide regulatory guidance for the crypto industry. 1/4 https://t.co/rlsS1DIFfl

— paulgrewal.eth (@iampaulgrewal) April 25, 2023

The company cited the Administrative Procedure Act, under which agencies are required to respond to such requests within a ‘reasonable time’.

Coinbase asked the court to compel the Commission to provide a ‘yes or no’ answer to the petition. According to the filing, the company’s outreach to the regulator was backed by more than 1,700 individuals and entities.

“Based on the SEC’s public statements and enforcement actions in the crypto industry, it appears that the Commission has already decided to reject the petition but is not informing the public. So the lawsuit filed today by Coinbase simply asks the court to compel the SEC to share its decision”, — said Paul Grewal, the exchange’s chief legal officer.

He noted that if the regulator’s response is positive, a rulemaking process will begin, which would signal to industry participants the legality of their activities. A ruling against the SEC would allow Coinbase to appeal the regulator’s decision in court and have the arguments heard in the legal arena.

Grewal stressed that the company regards cryptocurrency regulation as necessary; however, it is clear that there is no clarity among agencies on this matter.

“The crypto industry and its users need clear laws and rules designed for a new technology. Enforcement actions based on inappropriate securities laws are not the answer.”, wrote the lawyer.

The crypto industry, and its users need clear laws and rules to follow that are built for a new technology. Enforcement actions based in inapplicable securities law aren’t the answer. 4/4

— paulgrewal.eth (@iampaulgrewal) April 25, 2023

In July 2022, it emerged that the SEC beginning of the investigation into Coinbase. The exchange confirmed that it had received requests from the regulator.

In March 2023, the Commission filed charges against the company regarding the listing process and a number of products such as the staking service. According to the regulator, this concerns an unregistered offer of securities.