The United States Court of Appeals for the Third Circuit has ordered the Securities and Exchange Commission (SEC) to clarify its position on a rulemaking motion by cryptocurrency exchange Coinbase (COIN).
In April, Coinbase filed a lawsuit challenging the Administrative Procedures Act, asking the court to compel the SEC to act and get the regulator to respond to its request for formal digital asset regulations in 2022, arguing that the existing requirements for digital assets are inappropriate.
Now, the SEC has been ordered to say within seven days whether it intends to deny Coinbase’s request, provide the reasons for such a decision, or provide a timeline for when it expects a decision.
“Traffic rules, whether through legislation or rulemaking or both, must take precedence over enforcement action. That’s why we filed for regulation with the SEC almost a year ago,” said Paul Grewal, Coinbase’s chief legal officer. said in a tweet thread.
All of this is happening while the SEC is suing Coinbase over allegations that the company operates an unregistered securities exchange.
“We continue to believe that if the SEC had not already decided to deny our rulemaking request, the SEC could not initiate litigation against our industry like the case filed against us today,” Grewal tweeted.
The SEC must also explain why the court should not continue to monitor the case and why the SEC should not update Coinbase on the regular rulemaking it requested.
“If the SEC’s answer to our request for regulation is no, then they have a legal obligation to tell us because we have a legal right to challenge that no in court.” And serious questions need to be asked,” Grewal concluded.