Coinbase announced on Monday it has filed a petition to force the US Securities and Exchange Commission to take action on a month’s old petition which seeks to make the SEC clarify whether it will allow the industry to be regulated under existing SEC frameworks. The move is sure to escalate tensions between the cryptocurrency giant and the financial regulator, which has lately been amping up enforcement actions and warnings against prominent members of the cryptocurrency community.
In the original petition, dated July of 2022, Coinbase asked if the SEC would “propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods.” The SEC appears to have ignored the petition.
In a blog post, Coinbase chief legal officer Paul Grewal wrote, “The rulemaking process exists so that agencies can develop regulation with the benefit of public input, and have their position tested through judicial review. To date, more than 1,700 entities and individuals have submitted comments to Coinbase’s petition echoing the request for clarity.”
Grewel said that judging by the SEC’s public statements as well as their enforcement actions taken within the crypto community it would appear the regulator has already decided to deny Coinbase’s petition, “but they haven’t told the public yet.”
Coinbase’s petition is just the latest pushback the regulator has received from members of the crypto community as the regulator has embarked on a series of actions against crypto firms such as Bittrex, Gemini, and Genesis, as well as crypto-entrepreneurs including Justin Sun and Do Kwon.
Coinbase received threats from the SEC last month, over some of the exchange’s products. Although Coinbase has strived to be the golden standard among crypto-firms in terms of compliance with all laws and regulations, it has cost the company, as rivals overseas in international markets effortlessly rolled out new products and scaled, while Coinbase was continually being held back due to legal uncertainties.
The cofounder and Chief Executive of Coinbase, Brian Armstrong, has said that unless the US changes its attitudes on regulation, Coinbase may have to take its operation overseas. Last week he said, “Anything is on the table including, you know, relocating or whatever is necessary.”
Grewel wrote of the petition, “Coinbase does not take any litigation lightly, especially when it relates to one of our regulators. Regulatory clarity is overdue for our industry. Yet Coinbase and other crypto companies are facing potential regulatory enforcement actions from the SEC, even though we have not been told how the SEC believes the law applies to our business.”
