Coinbase files action against SEC seeking clarity on crypto regulations

Cryptocurrency exchange Coinbase has filed an action against the US Securities and Exchange Commission (SEC), seeking clarity on crypto regulations. The move comes as the SEC scrutinises Coinbase’s proposed crypto lending program, which the regulator believes may qualify as a security. Coinbase’s legal action is aimed at preventing the SEC from taking any enforcement action against the exchange over the proposed program until the regulator clarifies its stance on crypto regulations. The case could set a precedent for how the SEC oversees the use of cryptocurrencies in financial services.

Coinbase, one of the leading cryptocurrency exchanges in the United States, filed legal action on April 24 to compel a response from the U.S. Securities and Exchange Commission (SEC) regarding its earlier rulemaking request. In July 2022, Coinbase submitted a petition to the SEC, urging the regulator to develop guidance for companies in the crypto industry via its rulemaking process. However, the current filing does not necessarily compel the SEC to comply with the petition. Rather, if successful, it will force the SEC to accept or reject the petition.

Coinbase CEO Brian Armstrong separately revealed that he and his staff had met with the SEC, adding that Coinbase will “continue pushing for a clear rule book.” Before that appointment, they also met with Members of Congress to discuss regulatory issues, including SEC overreach.

This filing is indirectly related to a Wells notice that Coinbase received from the SEC in March. The notice is a sign that the SEC could soon file charges against Coinbase, which plans to fight the SEC in court if it decides to proceed. Coinbase needs the SEC to answer its petition so that members of the public (or Coinbase itself) can challenge certain SEC policies, even if the answer is “no.”

Coinbase is one of several crypto firms that have recently come under scrutiny from the SEC, including Kraken, Bittrex, and Ripple. Last week, House Republicans criticized SEC Chair Gary Gensler for his agency’s harsh treatment of the cryptocurrency industry.

In conclusion, Coinbase continues to seek regulatory clarity from the SEC regarding crypto regulations, and the recent legal action is an attempt to force the SEC to respond to its earlier rulemaking request. Despite the Wells notice it received in March, Coinbase has vowed to continue fighting the SEC in court should the regulator decide to move forward with its charges.

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