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- A Third Circuit order requires the U.S. SEC to respond to Coinbase’s pending petition for rulemaking within 7 days, thereby putting on hold SEC’s lawsuits against crypto exchanges.
- Coinbase’s Chief Legal Officer, Paul Grewal, suggests that SEC’s actions against any crypto exchange should not proceed without addressing the petition.
The recent U.S. Securities and Exchange Commission (SEC) lawsuits against two of the world’s largest cryptocurrency exchanges have shaken the digital asset industry. However, in a surprising turn of events, the Third Circuit has issued a short order necessitating the SEC to respond to Coinbase’s petition for rulemaking within seven days.
This action underscores the important role of regulation in the burgeoning cryptocurrency sphere, with Coinbase’s petition awaiting response for over a year. Notably, the court’s directive insists that the SEC must decide whether it denies or accepts Coinbase’s request for rulemaking. The SEC also needs to specify the additional time required to either grant or reject the said petition.
In response to the court’s directive, Paul Grewal, Coinbase’s Chief Legal Officer, stated that they contend the SEC should not proceed with litigation against any cryptocurrency exchange without addressing the pending petition. Furthermore, he stressed that if the SEC’s response is in the negative, Coinbase reserves the right to challenge it in court.
Earlier in April, Coinbase had filed a writ of mandamus in the U.S. Court of Appeals for the Third Circuit, effectively seeking to compel the SEC to respond to their petition. The SEC’s decision to sue Coinbase and other crypto exchanges, in spite of Coinbase’s unresolved petition, sparked controversy.
The SEC’s actions and its lack of response to Coinbase’s petition for rulemaking have raised questions about its approach towards the rapidly evolving crypto industry. SEC Chair, Gary Gensler, has faced criticism for allegedly not providing clear rules for the crypto market and leading the agency with forced enforcement.
Coinbase’s stance is that the rules of the crypto industry should be clarified before any enforcement actions are taken. If the SEC chooses to deny the rulemaking petition, it is legally obligated to inform the exchange.
As we move forward, all eyes are on the SEC to see whether it will reply to this petition and, if so, what its response will entail. This situation marks a pivotal moment in the relationship between regulatory authorities and the crypto industry, one that could potentially reshape the contours of crypto regulation.
