Dive summary:
- Cryptocurrency exchange Coinbase has asked a federal appeals court to require the Securities and Exchange Commission to establish new rules governing digital assets.
- Coinbase lawyer Eugene Scalia told the justices on Monday United States Court of Appeals for the 3rd Circuit which The SEC did not explain why it denied Coinbase’s request to establish rules that would clarify how to determine when digital assets are securities, Reuters reportedThe company wants the court to overturn the agency’s refusal.
- The agency, which largely treats digital assets as securities, has filed lawsuits against a number of companies in the cryptocurrency industry. Scalia accused the agency of engaging in practices “extraordinarily oppressive government behavior” by taking enforcement action against companies while not providing them with a way to register with the agency, Bloomberg reported.
Dive Overview:
Monday’s arguments are the latest development in the fractious exchanges between the regulator and the company. The SEC has said it considers most crypto tokens to be securities and therefore falls under its jurisdiction, while the industry says existing securities laws do not apply to cryptocurrencies.
Coinbase has filed a petition for regulation in 2022, seeking to clarify which crypto assets are securities and how they should be regulated.
The company then continued the SEC in April 2023, to encourage the agency to respond to its petition. THE The SEC denied the company’s request last December, disagreeing with the assertion that applying existing securities laws and regulations to crypto assets is “impracticable.”
Additionally, in June 2023, the SEC sues Coinbaseby loading it with the operation of an unregistered national securities exchange, broker-dealer and clearing agency, and also for failing to register the offer and sale of its staking program as a service. said in March that the matter can move forward.
Coinbase has long accused the SEC of regulating through enforcement. Scalia told the court on Monday that the SEC’s unsteady approach had made it impossible for the company to comply with laws and regulations, according to Reuters.
SEC attorney Ezekiel Hill, meanwhile, told the court that a new rule is not necessary for the crypto industry, since existing regulations are sufficient.
“If Coinbase wants to organize its business in a way that is not consistent with the existing regulatory framework, that does not give it the right to have the framework adapted to suit its business,” Hill said, according to the news agency.
In response, the judges acknowledged that the SEC did not have to justify its denials, but they also pressed Hill on the agency’s position that specifics around crypto assets are not a priority, Axios reported. The judges did not immediately issue a ruling after Monday’s hearing.
