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Regulator Claims Coinbase Is Not Entitled To Extraordinary Relief Since Its Petition Was Filed Less Than A Year Ago<\/p>\n
Crypto advocates’ efforts to obtain clear guidelines around US digital asset regulations hit another roadblock on Monday.<\/p>\n
The latest wrinkle in the saga is reply<\/a> from the SEC to a mandamus petition that Coinbase filed<\/a> lastmonth. A mandamus<\/a> is a legal remedy from a court that compels someone, typically a government agency, to fulfill their obligations under the law.<\/p>\n \u201cThat Coinbase would like its policy preferences addressed immediately does not entitle it to extraordinary relief ordering the Commission to act on a rulemaking petition that has been pending for well under a year,\u201d the filing concludes.<\/p>\n Coinbase filed the mandamus in April “alleging unreasonable agency delay” regarding the firm’s previous petition for rule making<\/a>which it filed in July 2022. Coinbase’s petition requested clarity around digital assets’ categorization as securities, which is the pivotal dispute between the industry and the SEC.<\/p>\n \u201cThe SEC’s response is just the latest instance of them punting rather than engaging,\u201d Amanda Tuminelli, Chief Legal Officer at the advocacy group DeFi Education Fund, told The Defiant. “Their position essentially boils down to ‘we don’t want to engage in clear rulemaking, and we think regulation by enforcement is working just fine in the meantime, thank you.'”<\/p>\n The SEC also signaled that it aims to continue to pursue enforcement action against digital asset companies and projects, rather than clarify rules around them. \u201cThe Commission can \u2013 and often does \u2013 enforce existing legal requirements while also considering further amendments to those requirements,\u201d it said.<\/p>\n Those looking for regulatory clarity around digital assets may have to wait a while.<\/p>\n The SEC cites a previous case in which the Court of Appeals for the Third Circuit, where the current case is being heard, “found no undue delay where mandamus was sought five years after a petition was filed.”<\/p>\n Tuminelli takes issue with the SEC’s framing. \u201cThe SEC’s argument that the court should not put it on a timeline and that it has acted reasonably in not responding to Coinbase’s petition because it was only filed a year ago, ignores the many requests for clear rulemaking that have been repeated by Coinbase and the industry for years prior,\u201d she said.<\/p>\n Some crypto skeptics welcomed the news.<\/p>\n \u201cThe SEC conducts a masterclass on securities regulation and legal brief composition in a response that will out assuredly result in Coinbase being thrown out of court forthwith,\u201d wrote<\/a> John Reed Stark, a well-known cybersecurity expert and lawyer.<\/p>\n The SEC’s response comes after the US Chamber of Commerce, the largest business advocacy group in America, filed an amicus brief<\/a> in support of Coinbase’s mandamus petition last week. The brief alleged that the SEC’s delay in addressing Coinbase’s petition for rulemaking was causing economic harm as well as violating federal law.<\/p>\n Tyler Badgley, senior counsel of the US Chamber Litigation Center, and lead attorney on the case, was unequivocal in a follow-up email. \u201cThe Chamber has long argued that regulatory uncertainty chills economic growth and innovation,\u201d he said. <\/p>\n “The SEC’s refusal to act, relying instead on regulation through enforcement, causes significant economic harm, deprives the public of any opportunity to comment, and bypasses the critical regulatory checks of the Administrative Procedure Act.”<\/p><\/blockquote>\n Paradigm, a major venture capital firm, also filed an amicus brief<\/a> in support of Coinbase’s mandamus.<\/p>\n William Mougayar, ex-chair of the Kin Foundation who engaged with the SEC when they sued Kik Inc. In 2019, selling unregistered securities sees a simple dynamic beneath the legal battle.<\/p>\n \u201cPertaining to Coinbase’s situation, basically [the SEC is] saying ‘no’ to innovation,” he told The Defiant. “Gary Gensler is the villain of crypto.”<\/p>\n<\/div>\nRegulation by Enforcement<\/h4>\n
Stifling innovation<\/h4>\n