Breaking News : Coinbase Sues SEC, Demands Clarity on Digital Asset Regulations

Coinbase has taken a step forward in seeking regulatory clarity for the crypto industry by filing a narrow action in federal court to compel the SEC to respond to their pending rulemaking petition. The rulemaking process is critical as it allows agencies to gather public input and develop positions that are then tested through judicial review. The SEC is legally obligated to respond to Coinbase’s rulemaking petition within a reasonable time, and if the answer is no, Coinbase would then be allowed to challenge that decision in court.

SEC needs to give clarity

The SEC has not yet informed the public of its decision, despite appearing to have made up its mind to deny Coinbase’s petition. Therefore, Coinbase’s legal action seeks to request that the SEC shares its decision, which is legally obligated to do. Coinbase recognizes the need for regulatory clarity in the crypto industry, and the rulemaking process is a critical step in giving the public notice about what activities they can and cannot engage in. Coinbase will continue to seek clarity until it is achieved, and recognizes its obligation to its industry, customers, shareholders, and employees to seek regulatory clarity in the US.

Crypto industry needs regulatory clarity

Coinbase believes that regulatory clarity is overdue for the crypto industry. Despite facing potential regulatory enforcement actions from the SEC, Coinbase and other crypto companies have not been told how the SEC believes the law applies to their businesses. Coinbase believes that rules are needed for the industry and will take every step available to seek clarity until it is achieved. The legal challenge is a small but important part of their plea for clear rules of the road.

SEC is not clear about its own stand on regulatory clarity

Paul Grewal believes that there is a lack of clarity among regulators regarding crypto and that the crypto industry needs clear laws and rules to follow that are built for a new technology. When Gary Gensler was asked whether Ether is a security or commodity, he refused to answer which clearly indicates that even he is not sure of what is a security and what is a commodity.

The best defense is a good offense

Jeremy Hogan tweeted about the legal dispute between Coinbase and the SEC, stating that “the best defense is a good offense.” He suggests that Coinbase is taking proactive measures by filing a narrow action in federal court to seek regulatory clarity for the crypto industry, rather than waiting for a potential lawsuit from the SEC.

Hayden Adams sarcastically responds to SEC’s stand

Hayden Adam, the founder of Uniswap, compared the statement that all tokens are securities to saying all pieces of paper are stock certificates on Twitter. The comparison highlights the need for regulatory clarity in the crypto industry and the importance of specific regulations rather than a broad classification of tokens as securities.