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Coinbase, a leading digital asset platform, has responded to the Securities and Exchange Commission (SEC) through a mandamus petition before the U.S. Court of Appeals for the Third Circuit. The purpose of this petition is to compel the SEC to address Coinbase’s long-pending request for rulemaking, which has been pending since July 2022.
Specifically, Coinbase seeks clarification on how federal securities laws apply to digital assets like cryptocurrencies and non-fungible tokens (NFTs). According to Coinbase, the existing regulations lack clarity and relevance in today’s rapidly evolving landscape.
Read Also: Breaking: US SEC Gets Multiple Amicus Curiae Against Coinbase And Ripple
Coinbase further asserts that the Securities and Exchange Commission (SEC) has effectively denied its rulemaking request through their pursuit of enforcement actions against digital asset firms without providing any formal regulations.
SEC Delays Action on Rulemaking Request
The court ordered the SEC to submit an additional brief to clarify their decision on Coinbase’s rulemaking request. Furthermore, the court also asked why it should not order periodic reports or establish a deadline for granting or denying the request.
Read Also: Coinbase Bags Another Win Against US SEC In Crypto Rulemaking Case
On October 11, 2023, the SEC filed its brief without providing a definitive response. SEC mentioned that their staff had recommended a course of action to the Commission for consideration on October 10, 2023. Unfortunately, no information was given regarding when the Commission would reach a decision or why more time was needed.
Coinbase Urges Court to Grant Mandamus
In its response submitted on October 13, 2023, Coinbase has strongly urged the court to grant mandamus and direct the SEC to take action within a period of 30 days. Coinbase firmly argues that the SEC’s report is nothing but a mere bureaucratic performance and provides confirmation that the agency has no intention to fulfill its request.
Coinbase supports its argument by citing recent statements made by the SEC Chair and other officials, asserting that existing regulations adequately cover digital assets. Furthermore, Coinbase points out recent enforcement actions carried out by the SEC against firms operating in the digital asset sector.
Read Also: Coinbase Says “We’ll Continue To Operate As Usual” In Response To SEC Lawsuit
Coinbase expressed that the digital asset industry found itself in an unprecedented Catch-22 situation. On one hand, the SEC required registration or threatened legal action; on the other hand, they failed to provide clear guidelines regarding when and how this registration was necessary.
Coinbase pointed out that the SEC uses various bureaucratic tactics to avoid judicial examination of its de facto denial. Moreover, Coinbase conveyed that if their mandamus petition gained approval, it would enable a long-awaited judicial review of the SEC’s lack of action and hold the agency accountable.
Coinbase further stated that the SEC lacked any valid reason for further delay and possessed all necessary information to make an official ruling on its request but simply chose not to do so without a court order.
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