Coinbase, a popular cryptocurrency exchange, has formally sued the U.S. Securities and Exchange Commission (SEC) for refusing to implement the exchange’s new rule from 2022.
“Coinbase General Counsel Paul Grewal shared on platform X about the filing process, emphasizing:
Promise made, promise kept
Grewal said
Grewal characterized the SEC’s decision as: ” arbitrary and capricious “.
In its petition for review, Coinbase argued that the SEC’s denial decision was “arbitrary and capricious” and violated the Administrative Procedure Act (APA).
1/3 Promise made, promise kept: we are now on file with Third Circuit to challenge the SEC’s arbitrary and capricious denial of our petition for crypto rulemaking. We again appreciate the Court’s consideration.
Coinbase clarified:
In July 2022, Coinbase filed a petition, arguing that the cryptocurrency market needs an “updated rule” to guide businesses and clarify that “cryptocurrencies are not securities and need clear guidance that falls outside the scope of current rules.”
On December 15, the U.S. Securities and Exchange Commission (SEC) rejected Coinbase’s proposal to establish regulations for cryptocurrencies. In the filing, the SEC outlined three reasons for their denial. First, the agency asserted that existing laws and regulations are sufficient to apply to the market for “security tokens.” Second, the SEC explained that the timing of Coinbase’s proposed rule was not appropriate, as they are currently gathering input on regulations for cryptocurrencies.
Finally, the SEC asserted their authority to decide the timing and process for rulemaking, not to follow Coinbase’s proposal.
Paul Grewal, General Counsel of Coinbase, criticized the decision and accused the SEC of shirking responsibility and emphasized that the SEC had dragged out the process of developing a crypto regulatory framework for too long, impacting the market.
The SEC also sued Coinbase in June 2023, alleging that it operated as an unregistered exchange and offered/sold unregistered securities.
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