Coinbase, one of the world’s largest cryptocurrency exchanges, has filed a lawsuit against the US Securities and Exchange Commission (SEC) to force the regulator to respond to a petition the company filed in July 2022.
In the petition, Coinbase requested that the SEC “propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods, including potential rules to identify which digital assets are securities.”
Unreasonable Delay by SEC
Months have passed since Coinbase submitted the petition, but the SEC has not yet responded to it. The latest lawsuit filed by Coinbase in the US Court of Appeals for the Third Circuit claims that the SEC has “unreasonably delayed” in responding to the petition, prompting the exchange to seek a writ of mandamus, which is a court order directing a public official to fulfill their obligation under the law.
In a blog post by Coinbase’s Chief Legal Officer, Paul Grewal, he highlighted that the lack of regulatory clarity in the cryptocurrency industry has led to the SEC’s adoption of a more stringent approach towards crypto companies. The post also noted that the SEC’s recent enforcement actions against crypto firms and lack of clear regulatory policies have caused significant harm to the United States.
Potential Implications for Coinbase
Coinbase has had a tumultuous relationship with the SEC, receiving a Wells notice in 2022 that suggested the company may have violated securities laws. While the exchange has maintained its innocence, it has expressed a willingness to take legal action against the SEC if necessary. The latest lawsuit filed against the SEC has the potential to impact Coinbase’s future operations in the US, with the company suggesting that it may leave the country if robust regulatory policies are not implemented.
Gary Gensler, the SEC Chairman, has been a vocal advocate for stricter regulations on cryptocurrencies. His approach has led some to criticize the SEC’s actions against crypto firms, with some calling for his removal from the position. However, Gensler has remained steadfast in his belief that cryptocurrency companies must comply with existing laws, stating that the Commission will not change its approach.