The uncertain regulatory environment in the US crypto market has led to many companies leaving the country. Coinbase, a major cryptocurrency exchange, has filed a lawsuit against the SEC to demand more clarity on cryptocurrency laws.
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The Exchange submitted a petition to the SEC in July 2022, asking 50 specific questions about the regulation of digital assets. The crypto exchange has requested a “yes” or “no” response from the SEC, as the Administrative Procedure Act obligates the regulator to reply within a reasonable time frame. If the SEC responds negatively, Coinbase plans to contest the decision in court.
In a blog post, Coinbase’s chief legal officer, Paul Grewal, stated that the SEC has not informed the public about its decision regarding the crypto exchange’s petition, but from its public statements and enforcement activities, it seems like the regulator has made up its mind to deny it
SEC Fights Back
The Exchange believes that regulatory clarity is long overdue and has highlighted the need for regulations several times in the past. The lawsuit was filed on the same day that the SEC claimed nine tokens offered on Coinbase were unregistered securities. The crypto exchange’s Chief Legal Officer has criticized the SEC for not providing clear guidelines and for taking potential enforcement actions against crypto companies without explaining how the law applies to them.
This is the first formal action taken by Coinbase against the SEC, over a month after the company was warned of pending legal action through a Wells notice. The SEC has taken action against several crypto exchanges, lenders, and individuals accused of manipulating crypto assets since January.
Grewal criticized the SEC for taking potential regulatory enforcement actions against Coinbase and other crypto companies without explaining how the law applies to them. The SEC has not yet responded to the lawsuit.