Coinbase, the popular cryptocurrency exchange, has taken legal action in a US federal court to compel the country’s securities regulator, the Securities and Exchange Commission (SEC), to provide a clear response to a petition that has been pending since July of last year.
The exchange had initially requested that the SEC propose and adopt clearer regulatory guidelines for the cryptocurrency industry in the US. The petition contained a total of 50 specific questions seeking clarification on the regulatory treatment of certain digital assets.
Coinbase has accused the SEC of dragging its feet and failing to meet its obligations under the Administrative Procedure Act, which requires the regulator to respond to rulemaking petitions within a reasonable time.
Coinbase Chief Legal Officer, Paul Grewal, emphasized the importance of clarity in regulatory matters, especially given the potential for enforcement actions by the SEC.
Grewal pointed out that Coinbase and other crypto companies are facing potential enforcement actions from the SEC, despite not being told how the SEC believes the law applies to their business. The SEC’s recent enforcement actions against Kraken and Paxos have added to the uncertainty in the industry.
Kraken recently reached a settlement with the SEC for failing to register the offer and sale of its crypto asset staking-as-a-service program.
The exchange agreed to cease operations of the program for US customers and pay a $30 million fine. However, SEC Commissioner Hester Peirce criticized the SEC’s conduct, stating that shutting down a program that has served people well is not an efficient or fair way of regulating.
In addition, Paxos, the issuer of the US dollar-pegged stablecoin Binance USD (BUSD), was ordered to stop minting and issuing the token by the SEC and the New York Department of Financial Services.
Democratic Massachusetts Senator Elizabeth Warren has also announced her plans to form an “anti-crypto army” as part of her Senate re-election campaign, adding to the growing uncertainty in the US crypto industry.
The lack of regulatory clarity in the US is a significant obstacle for the industry, as companies struggle to navigate the complex and often contradictory regulatory landscape. Coinbase’s legal action is an important step towards resolving this issue and providing greater certainty for the industry.
