Coinbase Sues SEC To Demand Regulatory Clarity on Crypto

In a bid to force the SEC into responding to a request for regulatory clarity, Coinbase has turned to US federal court

article-image

Artwork by Axel Rangel modified by Blockworks

share

Coinbase has sued the SEC, hoping to prompt the securities watchdog to provide regulatory clarity for the crypto industry.

In a narrow action, the top US crypto exchange requested a US federal court press the SEC to respond to its previous rulemaking petition within seven days. 

Last July, Coinbase requested the SEC propose and adopt rules to identify which digital assets are securities and how securities laws would apply to digital assets. 

The Delaware-registered exchange argued there is no clear or workable regime in place in the US for smooth functioning of the market. Then in March this year, the company asked the SEC for clarity on the treatment of staking services.

However, the SEC has not provided a response or commented on the request, according to Coinbase. 

“Coinbase does not ask the Court to instruct the agency how to respond. It simply requests that the Court order the SEC to respond at all,” Coinbase said in a recent federal court filing. A SEC spokesperson declined to comment.

The SEC published its framework for how digital assets fit into investment contract and securities laws back in 2019, however the US crypto ecosystem writ large has found it unsatisfactory.

SEC Chair Gary Gensler has often said that most of the 10,000 tokens in the crypto market are securities, with the exception of bitcoin. He’s also not been clear on his views about ether, yet he asks crypto companies to register with the SEC.

Coinbase said the only formal communication it has received from the SEC is a Wells notice, indicating that the agency intends to pursue enforcement action against the firm. 

Coinbase also garnered a Wells notice over its proposed interest-generating crypto accounts in Sept. 2021, which were later scrapped.

Coinbase stated that the lack of formalized decision-making from the SEC has created uncertainty for crypto companies and blocked them from adequately preparing for the future.

The exchange’s chief legal officer Paul Grewal separately opined that the SEC is bringing forward enforcement actions based on a view of the law that hasn’t been publicly shared.  

The company is among several other crypto firms that have faced the SEC’s wrath for allegedly offering unregistered securities. CEO Brian Armstrong has indicated the company is willing to consider leaving the US, mentioning “anything is possible, including relocating.”

“We believe we have an obligation to our industry, our customers, our shareholders, and our employees to leave no stone unturned when it comes to seeking regulatory clarity in the US,” Grewal wrote in a blog post.

“The action Coinbase filed today is a small but important part of our multi-year, continual plea to leaders in Washington for clear rules of the road.”

Updated Apr. 26, 2023 at 8:54 am ET: SEC declined to comment.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates.png

Research

The convergence of DePIN and energy generation aims to address modern grid challenges by incentivizing distributed generation.

article-image

The deal is likely to fuel further M&A around derivatives trading and infrastructure, Architect Partners’ Michael Klena says

article-image

Stripe announced Stablecoin Financial Accounts, which will allow businesses to have “stablecoin-powered accounts”

article-image

The deal is made up of $700 million in cash and 11 million shares of Coinbase’s Class A common stock

article-image

Blockworks Research uses numbers to help crypto advance to a higher stage of storytelling

article-image

While Arizona’s governor could veto another crypto reserve bill, similar North Carolina and Texas laws are approaching the finish line