US-based exchange giant COINBASE is seeking regulatory clarity on crypto from the U.S. Securities and Exchange Commission (SEC).
The top US crypto exchange has filed a motion in court to compel the SEC to respond to an earlier petition from the company requesting guidance for the digital asset industry.
Coinbase first submitted the petition for rulemaking last July but has yet to hear a “yes” or “no” answer to the request.
Explains Paul Grewal, chief legal officer at the exchange,
“The Administrative Procedure Act (‘the APA’) requires the SEC to respond to Coinbase’s rulemaking petition ‘within a reasonable time.’ If the SEC says no to our rulemaking petition, which it has the right to do, then Coinbase would be allowed to challenge that decision in court and explain in that formal setting why rulemaking is required.
So it’s important for the SEC and any other agency petitioned for rulemaking to respond to the petition once the agency has made up its mind, especially if the answer is no – otherwise the public can never exercise its right to ask a court if the agency’s decision was proper.”
Grewal argues that the SEC’s public comments and enforcement actions suggest the regulator has already decided to deny the petition, but they’re just choosing to withhold that decision from the public.
“So the action Coinbase filed today simply asks the court to ask the SEC to share its decision. This step may feel unusual, and it is, because this step is usually not needed. But it is also unusual for an agency to bring enforcement actions based on a view of the law that it has not yet shared formally with the public.”
Last month, the SEC sent a Wells Notice to Coinbase, which they had made a “preliminary determination” to recommend filing an enforcement action against the crypto exchange for allegedly violating securities laws.
