Coinbase Files Court Action To Force SEC To Provide Clarity On Crypto Regulations

Coinbase, a publicly traded American company that operates a cryptocurrency exchange platform, has filed a court action against the U.S. Securities and Exchange Commission (SEC) to force the financial regulator to respond to its almost nine-month-old request for cryptocurrency regulation clarity in the country.

The centralized crypto exchange platform filed a petition with the SEC last July, requesting the agency to engage in regulation-making for the industry and propose as well as adopt clearer regulatory guidelines for the sector in the United States.

Almost nine months after not receiving any response from the financial regulator, Coinbase made a move and filed a challenge in federal court to compel the SEC to provide a response to its petition.

Coinbase Chief Legal Officer Paul Grewal announced Monday that the company filed an Administrative Procedure Act challenge against the financial regulator, requesting the Third Circuit Court of Appeals to order the agency to provide clarity on how existing securities laws apply to the digital asset industry.

In a blog that came out following the court action, Grewal noted that “Coinbase has filed a narrow action in federal court to compel the SEC to do one simple thing: respond yes or no to Coinbase’s pending rulemaking petition that asks the SEC to provide overdue guidance for the crypto industry.”

The chief legal counsel of the publicly listed company also noted that “Coinbase does not take any litigation lightly, especially when it relates to one of our regulators,” adding that “regulatory clarity is overdue for our industry.”

He also underlined that despite the lack of regulatory clarity, “Coinbase and other crypto companies are facing potential regulatory enforcement actions from the SEC, even though we have not been told how the SEC believes the law applies to our business.”

It may be recalled that on March 22, the SEC sent Coinbase a Wells Notice – a document informing the firm that it is facing an upcoming legal action from the financial watchdog.

Brian Armstrong, the co-founder and CEO of Coinbase, said at the time that the firm is prepared to appear before the court to defend its name and reputation, believing that “we are right on the law, confident in the facts.”

Grewal also assured the public that “until the crypto industry gets that clarity, we will continue to take every step available to us to seek it, which includes today’s filing. We also remain available to the SEC and all of our regulators for dialogue [at] any time on these issues.”

Coinbase’s court action against the SEC came a few days after Armstrong made a visit to Congress and the SEC. Following the visits, he urged lawmakers to step in as the financial regulator has “caused untold harm to America.”