Coinbase chief legal officer Paul Grewal said the U.S. Securities and Exchange Commission’s (SEC) response to its legal action reinforces the exchange’s concerns about the financial regulator.
SEC response to Coinbase
According to a May 15 court filing, the SEC wants the court to reject Coinbase request for the Commission to provide a new regulatory framework for the crypto industry, arguing that it was under no obligation to do so.
The SEC wrote:
“Neither the securities laws nor the Administrative Procedure Act (“APA”) impose on the Securities and Exchange Commission (“SEC” or “Commission”) an obligation to issue the broad new regulations regarding “digital assets” Coinbase has requested.”
The financial regulator further noted that there was no legal precedence for Coinbase’s request for “an accelerated action” as its request could change the financial system as it is known. The Commission added that previous petitions in other areas had taken up to five years or more before responses were issued to the petitions.
“The Commission’s ongoing regulatory efforts regarding crypto assets that are securities or offered and sold as such—including the solicitation of comments from the public across numerous fronts—belie the assertion of closed-mindedness on which Coinbase’s petition depends. Coinbase’s preference for faster or different regulatory action by the Commission does not entitle it to extraordinary relief from this Court.”
Coinbase legal officer reacts
In a May 16 Twitter thread, Grewal pointed out that the SEC’s response was the first time the regulator formally explained its views about the regulatory clarity issue battling the crypto industry.
According to Grewal, the SEC’s response showed that the Commission would continue to use enforcement actions to substitute for rulemaking. He noted that the regulator told the court that the rulemaking process may take years, and they are in no rush.
The Coinbase legal counsel further highlighted that the Commission said its Chair Gary Gensler’s public statement should not be misconstrued as “formal guidance or policy statements from the SEC.”
Chair Gensler has made several public statements about the crypto space, describing all digital assets except Bitcoin (BTC) as securities and highlighting the noncompliance of crypto companies.
Grewal said Coinbase would issue a formal response to the SEC next week.
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