Coinbase’s chief legal officer Paul Grewal expressed concern over the SEC’s response, stating that they will happily continue to monitor the sector.
SEC argues that it should not be forced to make rules for the cryptocurrency industry
The U.S. Securities and Exchange Commission has finally issued a formal response in court regarding Coinbase’s request for clear regulation for cryptocurrencies, stating that any regulation may take years and that enforcement actions will continue in the meantime.
According to court papers filed on May 15th, the SEC argued that it has no obligation to comply with Coinbase’s requirements outlined in its petition, and also argued that the company has asked for a complex set of reforms and rulemaking in an unreasonably short period of time.
SEC Denies Coinbase’s Injunction Request
The securities regulator has asked the court to deny Coinbase’s injunction request, arguing that the injunction is an “extraordinary remedy” and that Coinbase “does not have and cannot demonstrate a right” to the satisfaction of its claims.
Coinbase’s chief legal officer, Paul Grewal, said in a Twitter thread that the filing may be the first time the securities regulator has explained its views on whether the SEC should create rules for the crypto industry. He also said there were still many things on the table that needed clarification.
Today the SEC responded to Coinbase’s petition for an injunction: it has asked the court to require the SEC to answer only yes, or no to whether it will undertake rulemaking for our industry
The SEC told the court that rulemaking can take years and that they are in no hurry, arguing that the SEC acknowledged that it will continue to use enforcement actions as a substitute for rulemaking for the foreseeable future, but not to worry: those enforcement actions may eventually ‘inform’ as-yet-unplanned rulemaking.
Just hours before the filing, SEC Chairman Gary Gensler gave a speech at the Financial Markets Conference, arguing that rules for cryptocurrencies were already published and sufficient.
Remarkably, in its recent presentation, the SEC distanced itself from any public commentary and the views of its chairman, although it appears to be more in relation to comments about Gensler’s views that most cryptocurrencies are classified as a security.
The SEC also said that Chairman Gensler’s public statements are not formal guidance or policy statements from the SEC and the public cannot rely on them as such, Grewal noted.
Ultimately, the regulator has argued that it should not be compelled to make rules for the cryptocurrency sector.
As Coinbase’s own filings make clear, considering the various possibilities it suggests that it is a necessarily complicated task. However, Coinbase filed its regulatory petition less than ten months ago, supplemented aspects of the petition less than three months ago, and sought to supplement the filing again only a few weeks ago.
Part of SEC’s argument for seeking denial is based on the assertion that Coinbase “cannot persuasively allege” that there has been any prejudice from the SEC’s failure to act on the petition since it was initially filed.
By Marina Meza
