Coinbase Urges U.S. Court to Compel SEC Action on Digital Assets
Coinbase’s Chief Legal Officer, Paul Grewal, has taken a step towards resolving the ongoing regulatory ambiguity surrounding digital assets. On October 13, 2023, Grewal filed a formal response with the U.S. Court of Appeals for the Third Circuit, urging the court to issue a mandamus order. This legal move seeks to compel the Securities and Exchange Commission (SEC) to act on Coinbase’s rulemaking petition within 30 days.
Since July 2022, when Coinbase initiated its petition for rulemaking, there has been a conspicuous absence of action from the SEC in providing clear directives on how securities laws apply to digital assets. Despite facing an enforcement action under these same laws, the SEC has not shown a willingness to expedite the clarification process.
SEC’s Lack of Transparency and Evasiveness Criticized
Paul Grewal and Coinbase have criticized the SEC’s lack of transparency and evasiveness, terming it a “bureaucratic pantomime.” The digital asset industry remains entrapped in a regulatory Catch-22 owing to the SEC’s demand for registration from digital asset firms without availing clear guidelines on the registration process. Furthermore, the contradictory statements emanating from the SEC alongside its aggressive enforcement actions further convolute the regulatory landscape.
Resistance Towards New Rulemaking
Recent developments have only served to underline the SEC’s apparent resistance towards initiating new rulemaking. The SEC Chair reemphasized the sufficiency of existing laws and rules for digital assets, while a noticeable surge in enforcement actions against digital asset firms, including novel actions against non-fungible token (NFT) issuers, has been observed. These actions presuppose the adequacy of existing rules, a notion that stands at odds with the premise of Coinbase’s petition for new rulemaking.
Call for a Mandamus Order
With the regulatory ambiguity continuing to cast a long shadow over the digital asset industry, Grewal argues that a mandamus order is warranted to hold the SEC accountable and to propel it into action. He emphasizes that clear guidelines are quintessential to ensuring legal compliance, nurturing industry growth, and eradicating the ongoing Catch-22 scenario that the industry finds itself ensnared in. The call for a mandamus order is seen as a necessary judicial intervention to end the SEC’s prolonged inaction and foster a conducive regulatory environment for digital asset firms.
Hot Take: Coinbase Demands Urgent Action from SEC on Digital Asset Regulation
Coinbase’s Chief Legal Officer, Paul Grewal, has filed a formal response with the U.S. Court of Appeals for the Third Circuit, urging the court to issue a mandamus order compelling the Securities and Exchange Commission (SEC) to act on Coinbase’s rulemaking petition within 30 days. The SEC’s lack of transparency and evasiveness has drawn criticism from Grewal and Coinbase, who argue that clear guidelines are essential for legal compliance and industry growth. Recent actions by the SEC, including enforcement actions against digital asset firms, contradict its claim that existing laws are sufficient. Grewal believes a mandamus order is necessary to end the SEC’s inaction and create a favorable regulatory environment for digital asset firms.
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