Coinbase Appeals SEC Denial Amidst Cryptocurrency Regulation Dispute

Coinbase argues SEC's rejection lacks proposed rule substance. SEC criticizes petition for not including proposed rule text.

Coinbase Appeals SEC Denial Amidst Cryptocurrency Regulation Dispute
Coinbase Appeals SEC Denial Amidst Cryptocurrency Regulation Dispute

Continued efforts are being made by Coinbase to ensure that appropriate legislation is enacted regarding bitcoin that is utilized as a security.

The cryptocurrency exchange filed an appeal against the United States Securities and Exchange Commission’s refusal of Coinbase’s petition for regulation on cryptocurrencies on December 15.

The chief legal officer of Coinbase, Paul Grewal, ensured that the company would take swift action as soon as the SEC’s denial was made public. The United States Third District Court of Appeals issued an order on December 18th, 2024, requiring the Securities and Exchange Commission (SEC) to submit the record of its decision by January 24th, 2024.

As part of its appeal, Coinbase provided evidence of the protracted procedure that was required to compel the Securities and Exchange Commission to reply to its petition. The petition stated that the SEC’s decision to reject the company’s submitted petition was “arbitrary and capricious, an abuse of discretion, and contrary to law, in violation of the Administrative Procedure Act.”

“The Commission’s refusal to engage in rulemaking, even while it continues a campaign of regulation by enforcement against Coinbase and others that exceeds its statutory authority, flouts the APA [Administrative Procedure Act] and fundamental principles of fairness it embodies.”

The Securities and Exchange Commission (SEC) criticized Coinbase’s petition in the letter of denial for failing to include “text or the substance of any proposed rule,” which is a requirement for petitioning.

The document went on to indicate that it disagreed with the petition’s assertion that the existing regulations were “unworkable” and that the agency has the authority to decide the priority of regulations and the timeframe of their implementation. The cryptocurrency community voiced their disapproval of the denial.

Following the official denial, the Chair of the Securities and Exchange Commission, Gary Gensler, issued a statement.

Coinbase, which is headquartered in San Francisco, has carried out a number of activities in order to show its support for the bitcoin business. These activities include political donations, lobbying, and public acts. In June, the Securities and Exchange Commission filed a lawsuit against Coinbase for violating securities laws.