- Coinbase files a petition urging SEC to address July 2022 request for regulatory clarity on digital securities.
- Chief legal officer Paul Grewal suggests SEC may have already decided to deny the petition but hasn’t informed the public.
- The petition comes amid rising tensions and a regulatory crackdown on digital asset firms in the U.S.
Coinbase, the leading cryptocurrency exchange, filed a suit against the SEC on Monday, urging the regulator to address a July 2022 petition for regulatory clarity. The initial petition inquired whether the SEC would propose and adopt rules for the regulation of securities offered and traded via digital methods. However, the SEC failed to respond to the petition, prompting Coinbase to escalate the issue.
“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,” wrote Paul Grewal, Coinbase’s chief legal officer, in a blog post.
Grewal said that the SEC’s public statements and its enforcement actions in the crypto market indicate that the regulator had already decided to dismiss Coinbase’s petition, adding, “They haven’t told the public yet.”
The petition, filed in the U.S. Court of Appeals for the Third Circuit, comes as the latest pushback against the SEC, which has increased enforcement actions and warnings against crypto firms such as Bittrex, Gemini, Genesis, and entrepreneurs like Justin Sun and Do Kwon in recent months. Coinbase’s petition was filed on the same day that the SEC threatened to sue Coinbase over some of its products. The SEC claimed that nine tokens available on Coinbase were unregistered securities.
Meanwhile, CEO Brian Armstrong has hinted that the firm is considering moving its headquarters outside the U.S. unless regulatory policies in the nation are altered. He indicated last week that “anything is on the table,” meaning that “relocating or whatever is necessary” is a possibility.
Coinbase’s legal challenge comes as the company is set to report its earnings for the first fiscal quarter of this year on May 4, providing an opportunity for analysts to assess the health of the digital assets industry.