SEC Denies Coinbase Request: Crypto Industry Faces Setback!

Key Points:

• The Securities and Exchange Commission responds to Coinbase’s request for action on regulatory clarity.
• Coinbase demanded federal courts to instruct the SEC to act and issue clear guidelines.
• The SEC suggests that deliberating over significant changes sought by Coinbase takes time and it is particularly true given the Commission’s active regulatory and enforcement agenda in this area.

Coinbase filed a mandamus petition that urged the Securities and Exchange Commission to create clear regulatory guidelines for crypto exchanges and companies.

The SEC has since responded to the complaint, stating that COIN has no right to mandamus, which is a court order that commands a government agency to carry out certain duties. In response, COIN has instead requested the court to compel the SEC to act on its rulemaking petition. However, the SEC argues that no statute requires the agency to take action on a specific timeline.

The agency also notes that it has only been a few months since COIN’s petition was filed, and even less time since the company supplemented the record. The SEC emphasizes that deliberating over the significant changes sought by Coinbase requires a considerable amount of time, especially considering the potential impact on both crypto assets and securities markets.

While the SEC has been actively enforcing regulations under Gary Gensler’s leadership, some proponents of the crypto industry argue that the agency has been particularly active. For instance, Kraken settled over its staking service after the SEC brought an action against the project. Nonetheless, Coinbase remains firm in its determination to press for regulatory clarity, given its available resources.

Coinbase initially filed its suit in response to a Wells Notice received in March 2023, which preceded formal regulatory enforcement action from the SEC. The Notice pertained to issues the agency found with the exchange’s Wallet and Prime services.

SEC concludes that Coinbase’s desire for immediate policy preferences does not entitle it to extraordinary relief ordering the Commission to act on a rulemaking petition that has been pending for less than a year.

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