America’s largest crypto exchange Coinbase has responded to the Securities and Exchange Commission. The move follows a refusal to provide clarity on crypto regulations following a petition.
On May 23, Coinbase Chief Legal Officer Paul Grewal said that the firm has replied to the SEC’s arguments against its petition for a writ of mandamus.
“Mandamus is the tailor-made remedy for the extraordinary facts presented here. We continue to appreciate the Court’s consideration,” he added.
Mandamus is a writ issued by a court requiring a public official or entity to perform a duty associated with that office, in this case, the SEC.
Coinbase vs SEC Battle Continues
Coinbase filed a petition in July 2022 asking the SEC to provide overdue guidance for the crypto industry. It has since been ignored. In April, the firm filed again in a move to spur the regulator into responding to the petition.
The SEC responded earlier this month, claiming Coinbase had no right to request regulatory clarity and that securities rules already exist.
Furthermore, the SEC hit Coinbase with a threat of enforcement action through a Wells notice in March. The firm has asked for open dialogue but that too has fallen on deaf ears.
In the latest court filing, the firm suggested that regulation by enforcement was the root of the problem, not the solution.
“The SEC’s delay in deciding whether to conduct a rulemaking is indefensible given its decision to pursue an aggressive, accelerating enforcement campaign regarding the very topics identified in Coinbase’s petition.”
“The SEC’s threatened enforcement action against Coinbase dispels any doubt,” it added.
The filing also stated that the SEC had received five petitions regarding rulemaking clarity since 2017. It has failed to act on any of them.
Coinbase counsel asked the court to issue a writ of mandamus. This was instructing the SEC to respond to the rulemaking petition within seven days. Alternatively, it wanted an explanation for the delay. This is likely to result in another SEC filing reiterating its previous stance that rules for securities trading are clear.
Commodity Confusion
This week, Commodities and Futures Trading Commission (CFTC) chair Rostin Behnam asserted that most cryptos were not securities.
Speaking on a Bloomberg podcast, he said the agency ensures assets are legally considered commodities before they can be listed. He also referenced previously approved Bitcoin and Ethereum exchange-traded funds (ETFs) from 2017 and 2020.
“If you look up the definition of a commodity under the CEA [Commodity Exchange Act], nearly everything is a commodity, including securities,” he said.
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