Crypto exchange Coinbase is continuing its legal battle against the United States Securities and Exchange Commission (SEC) by urging a court to compel the agency to initiate a long-overdue process for establishing rules for the crypto industry. In a filing with the Third Circuit Appeals Court on March 11, Coinbase argued that the SEC violated the Administrative Procedures Act (APA) when it rejected the exchange’s petition in July 2022 to establish crypto regulations without providing a sufficient explanation. Coinbase claimed that the SEC’s justification for refusing to engage in rulemaking was insufficient and arbitrary. The exchange also accused the SEC of failing to clarify how securities laws apply to crypto while aggressively enforcing those rules against multiple crypto companies. Coinbase requested that the court review its petition, reject the SEC’s denial, and compel the agency to begin the rulemaking process. In a related post, Coinbase’s legal chief, Paul Grewal, stated that if the SEC believes it has the authority to regulate digital assets, it must explain its reasoning and allow the public to understand and challenge its views through a rulemaking process. Coinbase’s filing also alleged that the SEC inconsistently changed its stance on crypto, claiming limited authority initially and later asserting sufficient authority to oversee the industry. Coinbase argued that the SEC lacked the power to change its position without congressional approval, which the exchange and other platforms have argued in their motions to dismiss SEC lawsuits against them. The appeal against the SEC’s denial of rulemaking is separate from the SEC’s lawsuit filed in June 2023, which accused Coinbase of operating as an unlicensed exchange and offering unregistered securities. In January, Coinbase and the SEC presented oral arguments regarding the exchange’s motion to dismiss that case, making similar claims that the SEC lacks authority over crypto exchanges without congressional authorization. The proposed crypto regulations in the US are driven by lawmakers’ fear and doubt, according to experts.
Coinbase critiques SEC's rationale for rejecting cryptocurrency rulemaking, deeming it insufficient