- Coinbase wants the court to force the SEC to respond to a petition for crypto rules.
- The Securities and Exchange Commission has provided its response to the petition.
- Coinbase faces a daunting task, but there is a twist.
the United State The Securities and Exchange Commission has ramped up its efforts to enforce crypto in 2023, despite an industry-wide outcry for clear rules.
Coinbasethe largest crypto exchange in the United States, decided that The SEC took it to court over this apparent lack of clarity About the digital assets that make up securities.
But not intimidated by the widespread support Coinbase received, the SEC filed to dismiss the case. To understand the SEC filing, it is necessary to first understand what Coinbase is asking.
Order from Mandamus
In April, Coinbase petition With the US Court of Appeals 3rd Circuit for a “compulsory order” to the Securities and Exchange Commission.
An authorization order refers to a court order directing a lower court or government agency to properly perform a duty. Mandamus is a Latin word that literally means “we command”.
In Coinbase v. SEC, the cryptocurrency exchange is asking the court to compel the markets regulator to respond to a July 2022 petition to set crypto rules.
"The Administrative Procedure Act (“the APA”) requires the SEC to respond to Coinbase’s rulemaking petition 'within a reasonable time.' If the SEC says no to our rulemaking petition, which it has the right to do, then Coinbase would be allowed to challenge that decision in court and explain in that formal setting why rulemaking is required," Coinbase Chief Legal Officer Paul Grewal wrote in a company blog post announcing the lawsuit.
The case of Coinbase v. the Securities and Exchange Commission has received significant support, particularly from the US Chamber of Commerce. The Chamber represents more than 3 million companies and is considered one of the most influential business organizations in the world.
In a May 9 lawsuit, the organization announce His support of cryptocurrency exchanges as amicus curiae. At the same time, the Chamber criticized the SEC for its “harmful” and “illegal” approach to regulating crypto assets. The chamber argued that the SEC’s delay in responding to the Coinbase petition stifled economic growth and innovation.
On the other hand, the SEC begged to disagree with Coinbase and its backers.
The SEC responds
in filing On Monday, May 15, the SEC asked the court to deny Coinbase’s request to force it to respond to its petition in July 2022. The regulator highlighted that it has no specific time to respond to such petitions, emphasizing that the complexity of the matter requires a longer period to consider. .
SEC attorneys also argue that the agency did not form a private opinion on the petition, despite Coinbase’s claims to the contrary. The market regulator also emphasized that its participation in crypto enforcement actions did not eliminate the possibility of rule making. The SEC highlighted that it has proposed rules regarding cryptocurrency custody and the definition of exchanges.
The SEC has argued that crypto enforcement actions have informed its deliberation on whether or not to create separate rules for crypto markets.
How will the SEC filing affect the case?
Associate law professor and former SEC counsel, JW Verret, confirmed the odds are in favor of the SEC in an interview with Daily Queen. Verrett has expressed that the SEC has the upper hand in the case, not necessarily because of its arguments but because the matter in mandate cases is “very hard to win” in general.
But the associate law professor believes that Coinbase knew about these possibilities before filing the case.
“This attempt to have a tool to enforce rule-making has always been a tall order, an illusion [Coinbase] I learned that. But what this is really about is that even if they lose this particular case, they get something from the SEC that helps them with their defensive actions,” Verrett said. Daily Queen.
The Securities and Exchange Commission filed Coinbase with a Wells noted in March on several aspects of his work. Many experts, including Verret, believe the regulator will eventually pursue a lawsuit, hence the reference for Coinbase’s defense actions.
According to Verret, arguments that would help the SEC win an injunction would likely lead to a shot in the foot in Coinbase’s enforcement action.
"The SEC has claimed that, on the one hand, they have discretion to go as slow as they like on rulemaking because this is a very complicated subject matter. But, on the other hand, it's so simple that anybody should be able to register now," Verret highlighted.
According to the former SEC advisor, the regulator’s position has been inconsistent internally.
“It’s hard for a judge to ignore that when you put it up as a defence,” he added.
Coinbase will be allowed to respond to the SEC filing next week, according to formulations From Paul Grewal, Chief Legal Officer, Coinbase.
on the flip side
- The judge has not decided the case yet.
Why should you bother
The regulatory climate for cryptocurrency in the United States is push companies abroad. The Coinbase lawsuit represents one of the industry’s most direct attempts to make amends.
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