In a recent revelation, the ongoing case between the United States Securities and Exchange Commission (SEC) and Coinbase, has taken a new turn. The regulator has decided to stay firm on its stance and has refused to entertain the exchange’s requests for clarity in crypto regulation.
On Monday, the SEC filed a brief in response to the Coinbase petition for a Writ of Mandamus. It made its stance very clear in that it was not prepared to abide by and provide any clarity on crypto regulations.
Further, the regulator claimed that Coinbase does not and cannot demonstrate a clear and indisputable right to relief. It also asserted that the SEC is not obligated to respond or to regulate crypto. As stated in its response:
Neither the securities laws nor the Administrative Procedure Act (“APA”) impose on the Securities and Exchange Commission an obligation to issue the broad new regulations regarding “digital assets” Coinbase has requested.
The regulator also stated that new regulations are unnecessary because digital assets are securities. In the last week of April, Coinbase filed a rulemaking petition against the SEC seeking an immediate determination to take a series of discretionary actions to replace existing applicable securities laws and regulations with a comprehensive new regulatory regime for the trading of crypto assets that are securities.
Additionally, the SEC claims that various paths suggested by Coinbase are “complicated.” Nothing happens fast with U.S. financial regulators, and this point was made by the SEC in conclusion.
Coinbase’s preference for faster or different regulatory action by the Commission does not entitle it to extraordinary relief from this Court. The petition should be denied.
Coinbase’s action against the SEC came after the regulator sent the firm a Wells Notice in March. The Wells Notice hints at a possible enforcement action to which Coinbase Chief Legal Officer Paul Grewal said they were “disappointed that the SEC is considering courts over constructive dialogue.”
About a month later, he said that Coinbase had repeatedly asked the SEC for guidance, but “to be candid … we’ve mostly got silence in response.” Notably, the SEC’s message sent out a clear indication that chairman Gary Gensler and his team are not interested in cooperating with crypto firms.
Additionally, Gensler has reiterated his usual anti-crypto stance at several occasions including a recent conference where he reaffirmed that all crypto assets are securities and existing regulations are sufficient.
While the SEC has rejected the idea of having a specific set of regulations for the crypto sector, the masses have enthusiastically responded to Coinbase’s blog post highlighting the need for regulation.
The SEC’s antagonistic crypto approach has been highly detrimental to the crypto sector pushing away innovation. Before Coinbase, the regulator had fined Kraken and sent another Wells Notice to Paxos targeting BUSD, the third-largest stablecoin. The SEC accused Paxos of selling unregistered security but the firm categorically disagreed with the regulator.