Coinbase is continuing its efforts to ensure adequate legislation on cryptocurrency used as securities. After the United States Securities and Exchange Commission (SEC) denied Coinbase’s petition for rulemaking on cryptocurrency on Dec. 15, the crypto exchange appealed the decision on the same day.
Coinbase chief legal officer Paul Grewal promised immediate action as soon as the SEC’s denial became known. On Dec. 18, the U.S. Third District Court of Appeals ordered the SEC to file the record of its decision by Jan. 24, 2024.
In its appeal, Coinbase documented the lengthy process that was necessary to compel the SEC to respond to its petition. It called the SEC’s denial of its petition “arbitrary and capricious, an abuse of discretion, and contrary to law, in violation of the Administrative Procedure Act.” In addition:
“The Commission’s refusal to engage in rulemaking, even while it continues a campaign of regulation by enforcement against Coinbase and others that exceeds its statutory authority, flouts the APA [Administrative Procedure Act] and fundamental principles of fairness it embodies.”
The SEC’s denial letter faulted the Coinbase petition for lacking “text or the substance of any proposed rule” as required for petitioning. It went on to disagree with the petition’s claim that existing regulations were “unworkable” and state that the agency has discretion over the priority and timing of regulation. The denial was criticized by the crypto community.
Related: Coinbase CEO says leaving US ‘not even in the realm of possibility right now’ — Report
SEC Chair Gary Gensler released a statement that closely followed the official denial.
Today the SEC denied Coinbase’s petition for rules for crypto. After 18 months of silence, we went to court to get the response the law requires. With appreciation for the Third Circuit, later today we’ll again seek its help by challenging the SEC’s abdication of its duty. ⬇️ pic.twitter.com/tFjiW53eF7
— paulgrewal.eth (@iampaulgrewal) December 15, 2023
San Francisco-based Coinbase has taken a variety of actions in support of the cryptocurrency industry, including political donations, lobbying and public actions. The SEC sued Coinbase for securities violations in June.
Magazine: Binance, Coinbase head to court, and the SEC labels 67 crypto-securities: Hodler’s Digest, June 4-10