Coinbase (NASDAQ:COIN) is going on the offensive with the Securities and Exchange Commission (SEC) and its insistence that all digital assets are securities and thus regulated the same.
In a blog post, Paul Grewal, the Chief Legal Officer of Coinbase, explained the company had filed an action demanding the SEC respond to a petition it filed requesting rulemaking – last year.
Important development https://t.co/tXBwgoEvTT
— Brian Armstrong 🛡️ (@brian_armstrong) April 25, 2023
“Today, Coinbase filed a narrow action in federal court to compel the SEC to respond yes or no to our July 2022 petition asking the SEC to use its formal rulemaking process to provide guidance for the crypto industry. The rulemaking process exists so that agencies can develop regulation with the benefit of public input, and have their position tested through judicial review. To date, more than 1,700 entities and individuals have submitted comments to Coinbase’s petition echoing the request for clarity.”
Grewal explained that under the Administrative Procedure Act (APA), the SEC is required to respond to the petition within a reasonable amount of time.
Grewal added that the Commission has ignored its petition as it has “already made up its mind to deny our petition.”
Grewal stated:
“The action Coinbase filed today is a small but important part of our multi-year, continual plea to leaders in Washington for clear rules of the road. We recognize that rules are needed. We’ve asked for rules to be developed. Our decision to move forward with today’s legal challenge is our attempt to compel basic rulemaking. It shouldn’t have come this – but it has, and we will see it through to its conclusion.”
Current SEC Chair Gary Gensler earned several Republic votes in the Senate when his confirmation hearing was held as it was thought he would be supportive of Fintech innovation – having taught courses on blockchain technology. Instead, Chair Gensler has made the decision to regulate by enforcement, asserting all digital assets are securities, with the exception of Bitcoin.
Meanwhile, Congress is looking to pass legislation that may provide clearly defined rules.
In recent days, the European Union approved legislation (MiCA) that aims to provide a regulatory ecosystem for digital assets that will provide investor protection while encouraging digital asset innovation.