SEC rebukes need for imminent crypto rulemaking, seeks denial of Coinbase petition
The U.S. The Securities Exchange Commission (SEC) has finally given a formal response in court in relation to Coinbase’s petition for clear crypto regulation, stating that any rulemaking may take years and that enforcement actions will suffice in the meantime.
According to court documents filed on May 15, the SEC argued that it is under no obligation to meet the requirements of Coinbase outlined in its petition, while also arguing that the firm has called for a complex set of reforms and rule-making in such a short amount of time.
The securities regulator has asked the court to deny Coinbase's petition for mandamus, arguing that mandamus is an "extraordinary remedy" and that Coinbase "does not and cannot demonstrate a right" to relief.
Coinbase’s chief legal officer Paul Grewal in a Twitter thread said the filing may be the first time the securities regulator has explained its views on whether the SEC should create rules for the crypto industry. He also said there was still a lot left on the table needing further clarification.
Today the SEC responded to Coinbase’s petition for a writ of mandamus — asking the court to require the SEC to respond just yes or no to whether it will undertake rulemaking for our industry. The SEC’s answer? A resounding maybe. 1/7
— paulgrewal.eth (@iampaulgrewal) May 16, 2023“The SEC told the court that rulemaking may take years and they're in no rush,” he said, adding:
“The SEC acknowledged that it will continue to use enforcement actions as a substitute for rulemaking for the foreseeable future, but not to worry — those enforcement actions may eventually ‘inform’ not-yet-planned rulemaking.”Grewal also claimed that the SEC distanced itself from the comments and views of its chair Gary Gensler, who has been adamant that there are already sufficient rules in place, and that most of crypto is classified as a security.
“The SEC also said that the public statements by Chair Gensler are not formal guidance or policy statements from the SEC and the public cannot rely on them as such,” Grewal wrote.
Related: Coinbase establishes advisory council with former US lawmakers
According to the filing from the SEC, the regulator is not required to rush into rule-making for the crypto industry.
“Neither the securities laws nor the Administrative Procedure Act impose on the Securities and Exchange Commission an obligation to issue the broad new regulations regarding ‘digital assets’ Coinbase has requested,” the SEC stated, adding that:
“As Coinbase’s own submissions make clear, considering the various paths it suggests is a necessarily complicated endeavor. Yet Coinbase filed its rulemaking petition fewer than ten months ago, supplemented aspects of the petition fewer than three months ago, and sought to supplement the record again only weeks ago.”While Coinbase was seeking to get clarification on the vague treatment of crypto in the U.S., it appears that the SEC’s latest comments have just added further confusion.
“Overall the SEC’s response reinforces Coinbase’s longstanding concern that our industry does not have clarity on what the SEC may consider to be within or outside its jurisdiction at any time, and it is likely to continue changing its mind along the way,” said Grewal.
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