Coinbase has filed a lawsuit in the US federal court seeking a "yes or no" response from the country's securities regulator to a petition the exchange has pending since July.
The petition asked the SEC to propose and adopt clearer regulatory guidelines for the cryptocurrency industry in the United States. In the petition, the exchange asked the financial watchdog to answer a total of 50 specific questions about the regulatory treatment of certain digital assets .The issues are wide-ranging in scope and scope, including asking the SEC to clarify how it classifies tokens as securities.
The action was accompanied by a blog post by Coinbase Chief Legal Officer Paul Grewal, who said the Administrative Procedure Act requires the SEC to respond to the exchange's rulemaking petition “within a reasonable time.” Now more than nine months have passed without any response, and the exchange is struggling to find answers:
“The SEC seems determined to reject our petition. But they haven't told the public yet. So today's lawsuit by Coinbase is simply asking the court to ask the SEC to share its decision.”
“For the SEC, and any other agency that requests rulemaking, once the agency has made a decision, it has to respond to the petition, especially if the answer is no,” Grewal explained.
Grewal explained that clarifying these issues is critical, especially in light of the fact that Coinbase was notified by Wells on March 22, which hinted at possible enforcement action against the cryptocurrency exchange. “Coinbase and other cryptocurrency companies are facing possible regulatory enforcement action by the SEC, although we have not been told how the SEC believes the law applies to our business,” Grewal added.
On Feb. 9, Kraken settled with the SEC for “failing to register offers and sales of its crypto asset collateralization-as-a-service program,” which the regulator claimed was a security under its supervision. The exchange agreed to stop offering its staking-as-a-service program to US customers and impose a fine of $30 million. The move proved unpopular internally, with SEC Commissioner Hester Pierce calling the SEC's actions "not an effective or fair way to regulate" and blasting her own agency for shutting down a "Plans to Serve People Well". Earlier this year, on Feb. 12, the SEC and the New York Department of Financial Services ordered Paxos, the issuer of the US dollar-pegged stablecoin Binance USD, stop minting and issuing tokens .
On March 31, Democratic Senator Elizabeth Warren of Massachusetts announced that she would form an "anti-cryptocurrency army" as a key part of her Senate re-election campaign, in addition to a series of US actions against cryptocurrencies. Coinbase has sign aled its intention to move some of its operations elsewhere as the US grows more vocal against the crypto industry. Coinbase received a license to operate in Bermuda on April 19, and the company is reportedly looking to launch a derivatives exchange there as soon as this week.
As Coinbase is the only publicly traded cryptocurrency exchange in the US, analysts will focus on the exchange's May 4 earnings report to gauge the health of the broader US crypto industry.
