Slamming the Securities and Exchange Commission (SEC) as pursuing a “power grab” by utilizing enforcement actions, Coinbase (NASDAQ:COIN) has launched another missile in the ongoing battle with the nation’s top securities regulator. The opening brief filed with the US Court of Appeals challenges the decision by the SEC to deny its petition for rulemaking on crypto, basically asking the Commission to craft bespoke rules that address the digital asset sector. Coinbase is asking the courts to vacate the Commission’s decision to pursue rulemaking as the SEC’s decision was “arbitrary and capricious.” It should be noted that Coinbase, as a public company, was approved to issue shares to trade on exchanges by the SEC.
Coinbase explains that at one point, the Commission said it had little authority over crypto but then changed its mind and decided that all digital assets are securities (minus Bitcoin).
To quote the brief:
“After its Chair unilaterally decreed his belief that most digital assets are securities, the agency swiftly pivoted by attempting to regulate them—not by rulemaking, but through enforcement, in a scorched-earth, nationwide campaign against an entire industry. That turnabout put digital asset companies in a Catch-22: The SEC told digital asset firms to “come in and register” under threat of enforcement suits, but registration is neither required nor possible under existing rules, which were designed decades ago for legacy financial assets and businesses.”
It is accurate that the SEC has asked digital asset firms to register. It is also accurate that this recommendation is little more than a trap as the Commission has pursued an anti-crypto dogma.
While the SEC has missed a historical opportunity to regulate digital assets, it is also true that Congress has stumbled around on Capitol Hill and failed to author legislation that could clear up the regulatory morass.
Paul Grewal, Coinbase’s GC, has authorized a thread on X that shares Coinbase’s perspective. You may read it all here.
