Supporters Rally Behind Coinbase in Call for Clear Crypto Regulations
Several prominent organizations, including Paradigm and the Crypto Council for Innovation, have submitted amicus briefs to the circuit court in support of Coinbase’s legal battle against the U.S. Securities and Exchange Commission (SEC). These backers are urging the SEC to reconsider its position and establish specific regulations for the crypto industry.
Amicus Briefs Bolster Coinbase’s Appeal
The amicus briefs were filed in support of Coinbase’s appeal, which originated from a petition the crypto exchange filed in July 2022. The petition requested the SEC to create rules for tokens classified as securities. However, the commission rejected the petition in December 2023, leading Coinbase to appeal the decision.
- The Crypto Council for Innovation (CCI), Satoshi Action Fund, Texas Blockchain Council, Paradigm, Lejilex, and the U.S. Chamber of Commerce are among the organizations that submitted filings to the Third Circuit Court of Appeals.
- These organizations argue that the lack of clear guidelines from the SEC creates uncertainty in the United States’ market. They also emphasize that without regulatory frameworks, companies may consider moving their operations elsewhere.
In its brief, the CCI criticizes the SEC’s denial of Coinbase’s petition, stating that it undermines fairness and harms consumers and innovators. Similarly, the U.S. Chamber of Commerce notes that the SEC’s failure to provide clarity poses risks to the crypto industry and highlights it as a case study in refusing to adapt regulation to new circumstances.
The joint filing from Satoshi Action Fund and Texas Blockchain Council emphasizes the need for clear rules rooted in congressional authority. They argue that when the SEC imposes adverse consequences and liability on the digital asset industry based on past actions taken in good faith, clear guidelines are essential.
Paradigm also criticizes the SEC’s insistence on a centralized issuer model for registration. They argue that it is impractical and hampers meaningful disclosures to the public. The brief also highlights dissent within the SEC, with Republican commissioners disagreeing with Chair Gary Gensler’s regulatory stance.
Both Paradigm and CCI stress the importance of predictability in compliance and criticize the SEC’s reliance on ad-hoc enforcement instead of precise rules.
Coinbase Chief Legal Officer Appreciates Support
Paul Grewal, Coinbase’s chief legal officer, expresses gratitude for the support received from various groups, including the U.S. Chamber of Commerce and the Texas Blockchain Council. Grewal emphasizes the importance of regulatory predictability for compliance and notes that Coinbase’s petition for rulemaking seeks to establish clear guidelines for the industry.
Coinbase filed a writ of mandamus in April 2020 to compel the SEC to respond to its petition. However, the SEC rejected it, stating that rulemaking could take years. In December 2023, SEC Chair Gary Gensler cited existing laws and regulations, stating that investors and issuers in crypto securities markets deserve the protection of securities laws. He also mentioned that the timing for proposed rulemaking is not right as the SEC is currently seeking comments on crypto-related rules.
While SEC Commissioners Hester Peirce and Mark Uyeda acknowledge Gensler’s points, they argue that addressing the issues raised in Coinbase’s petition should be done through public roundtables and requests for comment.
In March, Coinbase initiated legal action against the SEC by filing a lawsuit to compel the regulatory body to provide definitive guidelines for the cryptocurrency industry. In their court submission on March 11, Coinbase contested the SEC’s failure to enact formal rulemaking for the crypto sector. The exchange argues that the absence of clear regulations hinders the industry’s progress and creates uncertainty.
The timeline for the appellate court’s decision on the Coinbase case remains uncertain. However, recent enforcement actions by the SEC against various crypto firms and a U.S. district court’s imposition of sanctions on the SEC for acting in bad faith in a lawsuit against Debt Box have raised concerns about the commission’s conduct in other cases.
Hot Take: Urgent Need for Clear Crypto Regulations
The support from industry leaders for Coinbase’s call for clear crypto regulations highlights the urgent need for regulatory clarity in the cryptocurrency industry. Without specific guidelines, market participants face uncertainty and potential obstacles to innovation and growth. The amicus briefs submitted to the circuit court emphasize that clear regulatory frameworks are necessary to attract and retain companies within the United States.
Coinbase’s legal battle against the SEC serves as a crucial test case for establishing clear rules and predictability in compliance. The outcome of this case will have significant implications not only for Coinbase but also for the entire crypto industry. It is essential for regulators to consider these amicus briefs and work towards creating a regulatory environment that fosters innovation while ensuring investor protection.
By
By
By
By