- The U.S. Court of Appeals for the Third Circuit said the SEC must explain why it denied Coinbase’s petition.
- Coinbase has asked the agency to clarify how securities laws apply to cryptocurrencies.
- The court added that it would not force the SEC to implement new rules for crypto assets.
In a statement released Monday, the U.S. Court of Appeals for the Third Circuit directed the Securities & Exchange Commission (SEC) to comply with Coinbase’s request for crypto regulation.
Coinbase Gets Court Approval for SEC to Clarify Crypto Regulations
The U.S. Court of Appeals for the Third Circuit has ordered the SEC to respond to Coinbase’s petition regarding the regulation of cryptocurrencies. The SEC previously denied Coinbase’s request, but the three-judge panel ruled that the denial was unreasonable.
“Because we believe the SEC’s order was conclusive and insufficiently reasoned, and therefore arbitrary and capricious, we grant Coinbase’s motion in part and remand to the SEC for a fuller explanation,” the court said in a statement .
Coinbase’s filing with the SEC began in July 2022 after the exchange asked the regulator to provide an adequate explanation of how securities laws apply to digital assets.
The petition also urges the agency to develop regulatory frameworks tailored to the world of digital assets, making it easier for companies to comply with federal laws.
“In the context of securities law, it is not notable that new complex financial instruments do not always fit neatly into existing securities rules, especially if the inherent attributes of these new financial instruments may harm the objectives of these rules,” the court noted.
The exchange and the broader crypto community view the court’s position as a big victory for the crypto industry.
However, the court also said it would not order the SEC to pursue regulatory proceedings at this point.
Meanwhile, The Washington Post revealed in an article on Monday that the Trump transition team and entrepreneur David Sacks were working on a legislative strategy in collaboration with crypto industry leaders.
The article stated that Donald Trump should sign executive orders on his first day in office. The order is said to address issues related to the debanking of crypto companies and the repeal of Staff Accounting Bulletin 121 (SAB 121).
