Paul Grewal, Coinbase’s chief legal officer, said the U.S. Securities and Exchange Commission’s (SEC) response to its legal action reinforces the exchange’s concerns about the financial regulator.
SEC response to Coinbase
According to a May 15 lawsuit, the SEC wants the court to deny Coinbase’s request for the Commission to provide a new regulatory framework for the crypto industry, arguing that it was under no obligation to do so.
The SEC wrote:
“Neither the securities laws nor the Administrative Procedure Act (“APA”) imposes an obligation on the Securities and Exchange Commission (“SEC” or “Commission”) to issue the broad new “digital asset” regulations Coinbase is seeking to has asked.”
The financial regulator further noted that there was no legal priority for Coinbase’s request for “an expedited action” as its request could change the financial system as it is known. The Commission added that previous petitions in other areas had taken up to five years or more to respond to.
“The Commission’s ongoing regulatory efforts regarding crypto-assets that are or are offered and sold as securities – including soliciting public comment on numerous fronts – contradict the allegation of narrow-mindedness that the Petition of Coinbase depends. Coinbase’s preference for faster or different regulation by the Commission does not entitle it to extraordinary relief from this court.”
Coinbase legal officer responds
In a May 16 Twitter wireGrewal pointed out that the SEC’s response marked the first time the regulator has formally stated its views on the problem of regulatory clarity the crypto industry is grappling with.
According to Grewal, the SEC’s response showed that the Commission would continue to use enforcement action as a substitute for regulation. He noted that the regulator told the court that the regulatory process could take years and they are in no rush.
Coinbase’s legal counsel further emphasized that the Commission said its chairman Gary Gensler’s public statement should not be misinterpreted as “formal guidance or policy statements from the SEC.”
Chairman Gensler has made several public statements about the crypto space, describing all digital assets except Bitcoin (BTC) as securities and highlighting the non-compliance of crypto companies.
Grewal said Coinbase would provide a formal response to the SEC next week.
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