Battle Lines Drawn: US Chamber of Commerce Sides With Crypto Industry Against SEC

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In a surprising twist, the US Chamber of Commerce has taken up arms on the battlefield of digital assets.

According to a report by The Block, the influential business advocacy group has backed Coinbase and other critics of U.S. regulation in the digital asset sector, particularly regarding the position of the Securities and Exchange Commissions (SEC ) the United States.

The Chamber of Commerce expressed support for Coinbases’ lawsuit against the SEC in response to a request for crypto-specific rulemaking. On April 24, 2023, Paul Grewal, Chief Legal Officer of Coinbases, detailed in a blog post that Coinbase had filed a narrow suit in federal court, requiring the SEC to give a yes or no answer to its July 2022 petition, which was asking for formal advice on developing rules for the crypto sector.

On April 24, 2023, Coinbase filed a writ of mandamus with the United States Court of Appeals for the Third Circuit. The petition seeks to urge the Securities and Exchange Commission (SEC) to take action against Coinbases pending the regulatory petition. The goal? To seek much-needed clarity for the rapidly growing crypto market.

Coinbase attorney Eugene Scalia wrote a compelling argument, highlighting the urgency of the situation. In the petition, Coinbase seeks a writ that would compel the SEC to respond quickly to its regulatory petition. It is important to note that Coinbase does not seek to dictate the agency response, but rather seeks official acknowledgment of its petition.

Scalia pointed to repeated indications from the SEC that it had already decided to dismiss the petition, raising concerns about the agencies’ delay in officially announcing its decision. This delay, according to Coinbase, not only hampers progress, but also hampers the crucial judicial review the industry desperately needs.

The Chamber of Commerce, in its court filing supporting the lawsuit, argues that the SEC’s silence in response to Coinbases’ request is causing substantial economic harm to Coinbase and the broader business community.

Additionally, the association challenged the SEC’s enforcement action against Krakens’ staking-as-a-service business. Although Kraken has since installed and ceased this line of business in the United States, the Chamber criticizes this action as indicative of an overly aggressive enforcement posture by the SEC that could compel more companies of assets digital to end deals in the United States.

The business group also castigates the uncertainty surrounding Ether, the second-largest cryptocurrency by market cap. Chambers’ memoir argues:

Ether has been around for almost a decade, has a market cap of over $220 billion, and is a fundamental part of the industry. Yet despite ether’s ubiquity, regulators still can’t agree on what it is.

This brief also observes the shift in tone around Ether from the SEC, the agencies’ disagreement with the Commodity Futures Trading Commission (CFTC) over the digital asset, and Gensler’s recent lack of clarity before Congress and reporters afterwards as to whether Ether is a security or not.

Additionally, the amicus brief filed on Tuesday (May 9, 2023) echoes an argument in the Coinbases lawsuit, alleging that the SEC has already decided to issue a rule but declined to formally respond to the request. This accusation stems from Gensler’s public statements indicating that existing financial market laws are sufficient to regulate digital assets.

As The Blocks report points out, Coinbase can challenge the agency’s decision in court, which could be a lengthy process. However, the company has opted to risk the preemptive lawsuit against the SEC now, choosing to fight on its terms rather than waiting to see if an investigation into several of its business sectors will result in enforcement action.

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