Coinbase has sued the SEC, expecting to prompt the securities to provide regulatory clarity for the crypto industry.
In the limited legal action, Coinbase has asked a federal court in the United States to order the SEC to respond “yes” or “no” to a petition submitted in July 2022 that subjects to " Petition for Rulemaking – Digital Asset Securities Regulation". In this petition Coinbase requested SEC to propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods, including potential rules to identify which digital assets are securities.
Here's the Petition for Writ of Mandamus filed by @Coinbase against the SEC.— MetaLawMan (@MetaLawMan) April 25, 2023
It is a brilliant piece of crisp, persuasive legal writing.
Gloves are off.@Coinbase slams the SEC for its "attempt to intimidate Coinbase" with the Wells Notice.
It's on. https://t.co/gOQwXp22nm
It certainly includes asking the SEC to clarify how it classifies tokens as securities. The petition also notes how trading crypto asset securities on SEC-regulated exchanges will take place.
After this in March 2023, Coinbase asked the SEC for clarity on the treatment of staking services subjecting to “Proof-of-Stake” Blockchain Staking Services. According to Coinbase, the SEC has not provided any response or comment.
Coinbase also stated that -
“Coinbase does not ask the Court to instruct the agency how to respond. It simply requests that the Court order the SEC to respond at all,” Coinbase said in a recent federal court filing. A SEC spokesperson declined to comment.
According to the Administrative Procedure Act, the SEC is obligated to respond to Coinbase “within a reasonable time.”
The above petition was presented when the SEC said nine tokens offered on Coinbase were unregistered securities, as stated in an insider trading complaint filed against a former product manager for Coinbase, Ishan Wahi, and two other individuals.
Responding to this, Coinbase’s Chief Legal Officer Paul Grewal wrote -
“Regulatory clarity is overdue for our industry. Yet Coinbase and other crypto companies are facing potential regulatory enforcement actions from the SEC, even though we have not been told how the SEC believes the law applies to our business.”
Coinbase said that the lack of formalized decision making from the SEC has created uncertainty for crypto companies and blocked them from adequately preparing for the future. The exchange’s chief legal officer Paul Grewal says that the SEC is bringing forward enforcement actions based on a view of the law that hasn’t been publicly shared.
In nutshell, Coinbase requested a US federal court press the SEC to respond to its previous rulemaking petition within seven days.
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