- Coinbase has won a ruling from the Court of Appeals for the Third Circuit over its demand that the SEC provide regulatory clarity
- The SEC must now reply to a demand Coinbase sent last year over clarification of the agency’s position on crypto
- Some believe that the ruling still won’t amount to much
The United States Court of Appeals for the Third Circuit has ruled that the Securities and Exchange Commission (SEC) must reply to Coinbase’s demand for clarity on the regulation of crypto within 10 days. The victory was announced on Twitter by Coinbase’s Chief Legal Office Paul Grewal and, should the SEC actually comply rather than find a way to slip through, should go some way to relieving the untenable situation regarding crypto regulation in the US.
Coinbase Seeking Crypto Guidance
Coinbase argued last week that the SEC has not provided adequate regulatory guidance for US-based companies in the crypto industry, stating that the commission must “at a minimum, outline how irrelevant and unsuitable requirements should be modified for digital assets.” It is engaged in a running battle with the SEC over crypto regulation, for which the SEC chair Gary Gensler was hauled over the coals at a government hearing last month.
Coinbase cited a petition from 2022 that requested official rulemaking in the digital assets sector, which the SEC has yet to address. The SEC has been given a 10-day ultimatum this week to provide a legal rationale for why it has not responded to the petition. While the ruling is a positive move, as the replies to Grewal’s tweet show, hopes are not high that it will actually amount to much:
How much you want to bet that they won’t comply?
— Cryptic Poet (@1CrypticPoet) May 3, 2023
The government simply asserts pressure on the court to move the goalposts
— GTX (@0x_gtx) May 3, 2023
Some Doubt the SEC Will Comply
While the court’s decision is a welcome one, very few people actually expect the SEC to capitulate and offering something different to its usual rationale: apply the Howey Test. Of course, this is the responsibility of the SEC rather than crypto organisations, who must be close to treating all coins apart from Bitcoin as securities.
However, with the SEC failing to outright clarify which coins are and aren’t and instead taking potshots at random ones, nobody knows for sure, which makes Coinbase’s efforts all the more important.