- Coinbase plans to take the SEC to court, escalating its battle for clarity on crypto regulations, following the Commission’s denial of its rulemaking petition
- Chief Legal Officer Paul Grewal confirmed the company’s intent after the SEC rejected Coinbase’s petition for new crypto regulations
- This legal escalation marks an ongoing conflict that began in 2022, with Coinbase urging the SEC to provide clarity on digital asset regulations
Coinbase will take the Securities and Exchange Commission (SEC) to court in its attempts to force clarity on crypto regulations, its legal head has said. The exchange’s Chief Legal Officer, Paul Grewal, announced the company’s intent to take its battle with the SEC further after the Commission denied Coinbase’s rulemaking petition seeking clarification on new crypto regulations for digital assets. The move would be an escalation in the battle that has been building in scale since 2022 when Coinbase wrote to the agency demanding clarity on digital asset regulations.
Coinbase Carries the Fight
Coinbase’s petition last year, in which it asked the SEC to propose and adopt rules for regulating digitally native securities, was met only with a delay from the SEC. Coinbase sought court intervention in April, leading to the SEC formally denying Coinbase’s motion last week, with Chair Gary Gensler saying, “The existing securities regime appropriately governs crypto asset securities.”
In a response on X, Grewal expressed Coinbase’s dissatisfaction with this outlook and said that it was prepared to take things to the next level in order to get clarity:
1/3 Promise made, promise kept: we are now on file with Third Circuit to challenge the SEC’s arbitrary and capricious denial of our petition for crypto rulemaking. We again appreciate the Court’s consideration.
— paulgrewal.eth (@iampaulgrewal) December 15, 2023
In his thread, Grewal thanked SEC Commissioners Hester Peirce and Mark Uyeda, both of whom echoed Coinbase’s stance that the existing rules are not fit for the digital asset space, and added that digital asset companies and regulators “should be working together to create laws and rules that will benefit consumers and US innovation, not defending lawsuits based on legal positions that change month after month.”
SEC vs. Coinbase at the Heart of the Division
Grewal’s comments, and Coinbase’s promise of more legal action, relate to a lawsuit filed against it by the SEC in June where the company has been charged with the sale of unregistered securities in the form of several cryptocurrencies.
Coinbase has argued that it has tried to have discussions with the SEC over which coins are and aren’t considered securities but that it has never gotten a straight answer, just lawsuits, which is when they find out the SEC’s opinion.
