Coinbase Takes Legal Action Against SEC
• Coinbase, a major U.S. crypto exchange, has filed a petition in federal court to compel the SEC to provide more regulatory clarity and guidance for the crypto industry.
• The Brian Armstrong-led exchange seeks to compel the agency to respond yes or no to its previous petition asking the agency to use its formal rulemaking process.
• Coinbase has noted that despite their efforts over the past year, including 30 meetings and supplemental comments, they have yet to receive any response from the SEC on their petition.
Background: Wells Notice & Enforcement Actions
In March 2021, Coinbase received a Wells notice from Gary Gensler’s Securities and Exchange Commission (SEC), notifying them of an impending enforcement action against them due to a possible violation of securities law. This prompted Coinbase’s preemptive move for legal action against the SEC in order to seek more regulatory clarity and guidance for the crypto industry.
Coinbase is requesting that the SEC clarify key areas of regulation through formal rulemaking processes such as identifying which cryptoassets are securities, registration of issuers, mandatory disclosures, exemptions and registration of exchanges. They have also suggested multiple potential registration paths that could be considered by the SEC for any digital assets that are properly subject to registration.
Time Elapsed Since Petition
It has been over nine months since Coinbase first submitted its original petition but they have yet to receive any feedback from the SEC regarding their request.
Coinbase’s proactive approach towards seeking greater regulatory clarity in the space indicates how important it is for clear regulations around cryptocurrencies and blockchain technology if they are going be seen as legitimate investments by institutional investors and regulators alike.