The US Court of Appeals for the Third Circuit has ordered the US Securities and Exchange Commission (SEC) to clarify its position on the rulemaking petition from cryptocurrency (COIN) exchange Coinbase.
In April, Coinbase filed an Administrative Procedure Act challenge asking the court to compel the SEC to force the regulator to respond to its 2022 petition to establish formal rules in the digital asset sector, arguing that existing requirements are not appropriate for digital assets.
Now, the SEC has been ordered to clarify within 7 days whether it intends to deny Coinbase’s application, the reasons for this decision, or the timeline in which it expects to make a decision.
“Rules of the road, from legislation or rule-making or both, must come before enforcement action. That’s why we petitioned the SEC to set the rules nearly a year ago in the first place,” Paul Grewal, chief officer Coinbase Legalists, he said in a tweet thread.
This all comes as the Securities and Exchange Commission is suing Coinbase over allegations that it operates an unregistered securities exchange.
“We still believe the SEC could not have proceeded with litigation against our industry, such as the case against us today, if the SEC had not already decided to deny our rulemaking petition,” Grewal tweeted.
The SEC also needs to explain why the court will not continue to oversee the case and why the SEC should not provide Coinbase with regular updates on rulemaking as required.
“If the SEC’s answer to our rule-making petition is ‘No,’ then we are required by law to tell us, because we have the legal right to ask ‘No’ in court. There are serious questions to be asked,” Grewal concluded. “.
