SEC seeks denial of Coinbase petition for imminent crypto regulations

The US Securities Exchange Commission (SEC) has finally issued a formal response in court regarding Coinbase’s petition for clear crypto regulation, saying any regulation could take years and enforcement actions will continue in the meantime.

According to court filings filed May 15, the SEC argued that it is not required to comply with Coinbase’s requirements outlined in the petition, while also alleging that the company unreasonably called for a complex series of reforms and regulations. short period of time.

The securities regulator has asked the court to dismiss Coinbase’s petition for mandamus, arguing that mandamus is an “extraordinary remedy” and that Coinbase “cannot and cannot demonstrate a right” to relief.

Paul Grewal, Coinbase’s chief legal officer, said in a Twitter thread that the filing may be the first time the securities regulator has expressed its views on whether the SEC should regulate the crypto industry. He also said there was still a lot on the table that needs clarification.

Today, the SEC responded to Coinbase’s petition for a subpoena of mandamus – asking the court to require the SEC to answer only yes or no to whether it would regulate our industry. The SEC’s answer? A resounding maybe. 1/7

— paulgrewal.eth (@iampaulgrewal) May 16, 2023

“The SEC has told the court that rules could take years to develop and they are in no hurry,” he said, adding:

“The SEC acknowledged that it will continue to use enforcement action as a substitute for regulation for the foreseeable future, but don’t worry — those enforcement actions may eventually ‘inform’ unplanned regulation.”

Just hours before the filing, SEC Chief Gary Gensler gave a keynote speech at the Financial Markets Conference, arguing that the rules for crypto had already been published and were sufficient.

Interestingly, in its recent filing, SEC has distanced itself from all of its chairman’s public comments and views, though it seems more related to comments about Gensler’s views that most of crypto is 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 as such the public should not rely on them,” Grewal stressed.

In the end, the regulator has argued that it should not be forced into making rules for the crypto industry.

“Neither the securities laws nor the Administrative Procedure Act imposes an obligation on the Securities and Exchange Commission to enact the broad new regulations regarding ‘digital assets’ requested by Coinbase,” the SEC stated, adding that:

“As Coinbase’s own entries make clear, given the different paths it suggests, it’s a necessarily complicated endeavor. Yet Coinbase filed its regulatory petition less than a decade ago, supplemented aspects of the petition less than three months ago, and attempted to refill the record just weeks ago.

Part of the SEC’s argument for seeking the denial is based on the claim that Coinbase “cannot conclusively argue” that the SEC has done any harm by not responding to the petition since it was initially filed.

Related: Coinbase is establishing an advisory board of former US legislators

Nor can the hard evidence that recent SEC enforcement actions in the crypto sector point to “a decision by the Commission not to engage in regulation.”

“The Commission continues to consider Coinbase’s petition,” the agency said.

“Overall, the SEC’s response reinforces Coinbase’s long-standing concern that our industry lacks clarity on what the SEC considers to be in or out of its jurisdiction at any point in time, and is likely to continue to change its mind along the way,” Grewal argued.

magazine: Crypto Regulation – Does SEC Chairman Gary Gensler Have the Last Word?