Coinbase, a leading cryptocurrency exchange, is persisting in its push for comprehensive legislation regarding the classification of cryptocurrencies as securities. Following the United States Securities and Exchange Commission’s (SEC) rejection of Coinbase’s petition for rulemaking on cryptocurrency on December 15, the exchange promptly filed an appeal on the same day.
Paul Grewal, Coinbase’s chief legal officer, had pledged swift action in response to the SEC’s denial. On December 18, the U.S. Third District Court of Appeals directed the SEC to submit the record of its decision by January 24, 2024.
In its appeal, Coinbase outlined the extensive process it underwent to compel the SEC’s response to its petition. The exchange characterized the SEC’s denial as “arbitrary and capricious, an abuse of discretion, and contrary to law, in violation of the Administrative Procedure Act.” Coinbase also criticized the SEC for its “regulation by enforcement” campaign against the exchange and others, which it believes surpasses the SEC’s statutory authority.
The SEC’s denial letter had cited the Coinbase petition’s lack of “text or the substance of any proposed rule,” a requirement for petitioning. The SEC further disagreed with the claim in the petition that existing regulations were “unworkable,” asserting its discretionary power over the priority and timing of regulation. The denial faced criticism from the cryptocurrency community.
San Francisco-based Coinbase, known for its proactive stance in supporting the cryptocurrency industry through activities like political donations, lobbying, and public initiatives, has been embroiled in legal matters with the SEC. In June, the SEC filed a lawsuit against Coinbase for alleged securities violations.
The appeal signifies Coinbase’s ongoing commitment to seeking regulatory clarity and transparency in the evolving landscape of cryptocurrency, with the exchange challenging the SEC’s regulatory approach and emphasizing the importance of fair and considered rulemaking.
