Cryptocurrency exchange Coinbase continues its legal battle with the U.S. Securities and Exchange Commission, asking the court to force the agency to begin a “long-overdue” process to create rules for the crypto industry. I'm looking for.
Coinbase stated in its March 11 opening brief in the Third Circuit Court of Appeals that the SEC denied the exchange's petition in July 2022 asking the SEC to enact virtual currency rules, and that the It was alleged that the Act violated the Administrative Procedures Act (APA), which sets out how to enact such regulations. He doesn't give a good reason as to why.
Coinbase said regulators' reasons for refusing to write the rules (SEC Chairman Gary Gensler disagreed that existing securities laws do not apply to cryptocurrencies) were “not enough” and that “the rules It is necessary to provide a reasonable reason for refusing to participate in the formulation.
The denial was “arbitrary and capricious” because the SEC failed to explain how securities laws apply to virtual currencies.[enforced] Coinbase claimed it was aggressively enforcing these rules by suing multiple crypto companies for violating securities laws.
Coinbase asked the court to grant the review petition, reject the SEC's denial, and force regulators to begin the rulemaking process.
March 11th Accompanied by X postPaul Grewal, Coinbase's head of legal affairs, said that if the SEC believes it can legally assert new powers over digital assets today (and it cannot), it will explain why in the rulemaking process. and must give the public an opportunity to understand and challenge those views.” ”
The SEC reversed its claimed authority.
Coinbase's 78-page brief also claims that the SEC has “suddenly changed its position” regarding cryptocurrencies.
The SEC had previously said it had “limited authority” and a “lack of legal clarity” regarding cryptocurrencies, but has since said it has sufficient authority to police cryptocurrencies. Coinbase insisted.
The exchange argues that the SEC does not have the authority to change its policies because it requires Congressional approval, a claim Coinbase, Kraken, Binance and others have made in motions to dismiss their lawsuits against the SEC. There is.
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“If the SEC insists on proceeding without Congressional approval, that decision will need to be made and implemented through future rulemaking,” Coinbase wrote.
Coinbase's appeal of the SEC's rulemaking denial is in a separate court from a lawsuit the SEC filed against Coinbase in June 2023, alleging that Coinbase operated as an unlicensed exchange and offered unregistered securities. It becomes a point of contention.
In January, Coinbase and the SEC held oral arguments on the exchange's motion to dismiss in the case. The lawsuit used much the same argument as this one: that the SEC has no authority over crypto exchanges unless Congress does so.
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