Coinbase Challenges SEC’s Crypto Regulation in Appeals Court – Crypto News

Coinbase Challenges SEC’s Crypto Regulation in Appeals Court – Crypto News

Crypto News – In a bold move, Coinbase has taken aim at the Securities and Exchange Commission (SEC), condemning its rejection of the company’s rulemaking petition as “arbitrary and capricious.” The crypto exchange expressed its dissatisfaction in a petition filed with the US Court of Appeals for the Third Circuit on March 11.

Should Coinbase succeed in its petition, the SEC would be compelled to establish clear regulatory frameworks showcasing its jurisdiction over digital assets, thus providing much-needed compliance guidelines for the burgeoning industry.

The crux of Coinbase challenge lies in its assertion that the SEC’s dismissal represents not only an abuse of discretion but also a violation of the Administrative Procedures Act. The company argues that the SEC’s refusal fails to offer substantive reasons for disregarding the concerns outlined in the petition.

Paul Grewal, Coinbase’s legal chief, elucidated the company’s stance, highlighting the SEC’s apparent lack of justification for its inaction despite the myriad of legitimate concerns raised in the petition. Grewal pointed out the ongoing struggle faced by Coinbase and other crypto firms in navigating the regulatory landscape, contrasting it with the SEC’s preference for punitive measures over regulatory clarity.

Grewal emphasized the detrimental impact of the SEC’s enforcement-centric approach on American consumers and innovation within the crypto space.

Coinbase clarified that it refrained from registering with the SEC as a national securities exchange or an alternative trading system due to its non-involvement in securities trading on its platform. The company underscored the absence of clear regulatory directives from the SEC concerning the application of securities laws to digital assets.

Furthermore, Coinbase argued that cryptocurrencies fall beyond the SEC’s purview due to the absence of a comprehensive regulatory framework for digital asset securities.

Grewal concluded by asserting that even if the SEC believes it has the lawful authority to assert control over digital assets, it must substantiate its stance through a transparent rulemaking process, affording the public an opportunity to comprehend and contest its viewpoint—a process that, according to Grewal, has been lacking in the current scenario despite legal requirements dictating otherwise.