During the Third Circuit Court of Appeals hearings, the SEC faced demands from Coinbase to establish clear rules for cryptocurrencies.
Third Circuit Court Hearings
During the Third Circuit Court of Appeals hearings, Coinbase had the opportunity to present its demands for clear crypto rules from the SEC. Coinbase's Chief Legal Officer, Paul Grewal, shared details of the hearing in his X post.
Coinbase’s Requests to SEC
Coinbase has repeatedly asked the SEC to create regulations for cryptocurrencies, but the commission has ignored these requests. The crypto exchange asked the court for an 'extraordinary remedy'. The SEC has been declining the need for crypto regulations while continuing enforcement actions against companies for failing to register. Paul Grewal also mentioned the petition filed by Coinbase to the SEC in 2022, asking the agency to propose rules for regulating digital assets. This would help identify which digital assets are securities and which are not, protecting crypto firms from strict enforcement actions and penalties.
SEC’s Response and Future Actions
In response to the petition, SEC Chair Gary Gensler issued a statement explaining why denying the request was the right decision. First, existing laws already apply to the crypto market. Second, the SEC addresses the crypto market through rulemaking. Third, the commission must have the discretion to set its own priorities. Despite not proving that cryptos are securities, the SEC has continued to penalize crypto firms. Coinbase’s counsel, Eugene Scalia, argued there's no system for registering a crypto business, yet the SEC continues to take enforcement actions. The SEC's counsel said it's not the agency’s job to act based on applicants' wishes. The court acknowledged that the commission is not required to justify its decision to deny rulemaking, but the SEC could not provide clear information on major cryptocurrencies like Bitcoin and Ethereum.
It will be interesting to see how this unfolds. The SEC will likely have to answer questions related to its stance on the crypto sector. The commission has taken many actions without providing clear guidelines and now needs to be more careful.
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