Coinbase has filed a petition to force the U.S. Securities and Exchange Commission to respond to a months-old petition asking whether the securities regulator would allow the industry to be regulated using existing SEC frameworks, the exchange company said Monday, allowing tensions escalated with the regulator ramping up enforcement actions and warnings against crypto companies, including the US giant.
In the July 2022 petition, Coinbase asked that the SEC “propose and adopt rules for the regulation of securities offered and traded through digitally native methods.” The SEC never responded to the petition.
“The regulatory process exists so that agencies can develop regulations using public input and have their position assessed through judicial review. To date, more than 1,700 entities and individuals have submitted comments to Coinbase’s petition echoing the request for clarity,” Coinbase Chief Legal Officer Paul Grewal wrote in a blog post.
Grewal claimed that the SEC’s public statements and crypto industry enforcement activities show that the regulator has already decided to deny Coinbase’s petition, “but they haven’t told the public yet.”
The petition, filed Monday in the U.S. Court of Appeals for the Third Circuit, is the latest backlash the SEC has received in recent months as the regulator moves actions against crypto companies Bittrex, Gemini and Genesis, as well as entrepreneurs including Justin. Sun and Doe Kwon.
Last month, the SEC threatened to sue Coinbase over some of the exchange’s products. Coinbase is the gold standard among crypto exchanges for regulatory compliance, but the US company has suffered over the years as it was unable to develop and roll out new products due to legal uncertainties, even as its rivals scaled in international markets.
Coinbase co-founder and chief executive Brian Armstrong has said the exchange could consider moving its headquarters outside the US unless the country changes its regulatory approach. “Everything is on the table, including moving or whatever is necessary,” he said last week.
“Coinbase does not take lawsuits lightly, especially when it comes to one of our regulators. Regulatory clarity is too late for our industry. Still, Coinbase and other crypto companies face potential regulatory enforcement action from the SEC, even though we have not been told how the SEC believes the law applies to our company,” Grewal wrote.