SEC asks court to deny Coinbase request for crypto rules

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The SEC argued that no law or regulation requires the agency to respond to Coinbases’ regulatory request within a specific time frame.

Photo by Sasun Bughdaryan on Unsplash

Posted May 16, 2023 at 5:21 a.m. EST. Updated May 16, 2023 at 11:07 a.m. EST.

The U.S. Securities and Exchange Commission (SEC) has formally responded to Coinbases’ lawsuit requiring the agency to respond to its regulatory petition.

In a May 15 filing, the SEC asked the court to deny Coinbases’ motion for mandamus, saying the crypto exchange did not qualify for the extraordinary remedy.

The response comes after Coinbase filed a lawsuit in April, asking the court to compel the regulator to respond to its request for specific rules on crypto assets. (Former SEC advisory board attorney JW Verrett compared Coinbases to a long-term chess strategy in an episode of Unchained last month).

The SEC believes it has no legal obligation to comply with this request and argued that no law or regulation requires the agency to respond within a specific time frame. The regulator said setting rules for crypto assets is a necessarily complicated business and suggested that rule-making would be a long and cumbersome process.

SEC Chairman Gary Gensler has repeatedly outlined his views on the apparent lack of regulation of crypto assets, though he deflected direct questions about whether certain cryptocurrencies should be classified as titles.

The Commission has made it clear that it will distance itself from the statements made by the Chairman in today’s filing, stating that the remarks made by an SEC member represent the views of the members only.

Indeed, Chairman Gensler gave a speech earlier the same day at the Capital Markets Conference, saying that the rules [for crypto assets] have already been published.

There are financial intermediaries, nodes in the network, and they have to come into compliance if they have securities on their platforms, Gensler said.

Coinbases Chief Legal Officer Paul Grewal tweeted that the SEC’s response reinforces exchanges’ long-standing concern that the crypto industry will not receive any regulatory clarity on whether certain tokens fall under the jurisdiction. regulators anytime soon. Until then, the regulator can continue to use enforcement action as a substitute for rulemaking, he said.

Overall, the SEC’s response reinforces Coinbase’s long-standing concern that our industry lacks clarity on what the SEC may consider to be inside or outside of its jurisdiction at any time, and he’s likely to keep changing his mind along the way. 6/7

— paulgrewal.eth (@iampaulgrewal) May 16, 2023

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