Coinbase to Appeal SEC’s Rulemaking Request Denial

After 18 months, the United States Securities and Exchange Commission (SEC) has officially denied the request for crypto rulemaking filed by Coinbase Global Inc. Rather than give up on this quest, Paul Grewal, the trading platform’s Chief Legal Officer (CLO) has confirmed the plans to appeal the response.

Coinbase Plans to Fight to the End

Taking to the X app, Paul Grewal bemoaned the move by the SEC to respond to its request for rulemaking after months of silence from the regulator. When the exchange did not get a response, it dragged the market regulator to court.

This was a last resort for the crypto trading platform and eventually, the Third Circuit Court ruled in the exchange’s favor. It compelled the SEC to grant the firm the request for regulatory clarity by providing a report on its stance as would be essential to the cause.

In the response published earlier today, the SEC denied the request on three key grounds including the fact that the “existing securities laws apply to cryptocurrencies,” that the “SEC addresses the crypto securities markets through rulemaking as well,” and that “it is important to maintain Commission discretion in setting its own rulemaking priorities.”

Paul Grewal disagrees with this position as he noted that no one looking at the crypto industry fairly can claim that the existing laws are clear or that there is no more work to be done. Grewal cited Gary Gensler’s Hearing in 2021 where he acknowledged that there are no applicable laws governing cryptocurrencies.

Today the SEC denied Coinbase’s petition for rules for crypto. After 18 months of silence, we went to court to get the response the law requires. With appreciation for the Third Circuit, later today we'll again seek its help by challenging the SEC’s abdication of its duty. 🧵⬇️ pic.twitter.com/tFjiW53eF7

— paulgrewal.eth (@iampaulgrewal) December 15, 2023

Grewal also cited an earlier comment from Rostin Behnam, the Chairman of the Commodity Futures Trading Commission (CFTC) when he said most of the tokens under applicable laws are commodities.

With his position, the Coinbase CLO did not put a time peg on when the firm would eventually file the appeal.

More Confusion in the Crypto World

The different positions of the SEC and the CFTC over the best categorization of the assets in the crypto world now form a major confusion for industry members.

Understanding which asset falls under securities and which falls under commodities still requires some forms of guidance that neither the SEC nor CFTC is willing to provide for now. Notably, industry experts like XRP holder’s lawyer, John Deaton believe the SEC Chairman is visibly gaslighting the American public as the crypto ecosystem has enough uniqueness to be classified differently.