SEC responds to Coinbase’s second request for action: ‘Still no’

The court asked the SEC to respond to Coinbase’s regulatory clarity request last week

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Coinbase CEO Brian Armstrong | Artwork by Axel Rangel

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The SEC has responded to Coinbase after a court requested clarity from the commission and gave them a seven-day deadline.

The SEC’s response is in Coinbase’s case against the commission — not the commission’s lawsuit against the crypto exchange.

The regulatory agency has said that the “mandamus petition should be denied.” Mandamus compels a government agency to act to fulfill its duties.

Lawyers for the SEC added that the “Commission has not decided what action to take on that petition in whole or in part—which is entirely reasonable given the breadth of the rulemaking petition and the fact that it was filed just months ago and supplemented by Coinbase more recently.”

However, the agency says that “Commission staff anticipate being able to make a recommendation to the Commission regarding Coinbase’s rulemaking petition within the next 120 days.”

In its response, SEC added that it believes that Coinbase’s assertions are “baseless.”

“Coinbase erroneously contends that the Commission’s enforcement of existing legal requirements, as well as certain statements by the Commission’s Chair regarding the application of existing statutes and regulations to crypto assets that are securities, constitute a sub silentio decision to deny Coinbase’s rulemaking petition,” the document states.

In a tweet, Coinbase’s chief legal officer, Paul Grewal, said that the filing conflates “the evidence of a decision those statements provide with an argument that the statements are themselves a decision.”

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Last week, the Third Circuit Court of Appeals requested that the regulatory agency respond to a writ of mandamus filed by Coinbase. 

The court ruling came after the SEC filed a lawsuit against Coinbase, alleging that the crypto company was running an unregistered exchange that listed multiple unregistered securities.

Specifically, the court wanted to know if the SEC was moving to deny Coinbase’s rulemaking petition or if the SEC needed more time to digest the petition. 

In late May, Coinbase filed a mandamus petition, essentially asking the court to oversee the regulatory agency’s regulatory approach to crypto.

Prior to the petition, the SEC had been ordered to respond to Coinbase’s regulatory clarity request.

To which the commission said, “Deliberating over the kind of significant changes sought by Coinbase, which could affect both crypto assets and the securities markets more generally, takes time—including, as here, time to weigh whether or not to initiate a rulemaking proceeding about such topics in the first instance.”

When reached for comment, Coinbase referred to Grewal’s tweet thread.

Update June 13, 2023 at 6:25 pm ET: Added comment from Coinbase.


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