Coinbase filed a lawsuit against the Securities and Exchange Commission in an effort to obtain clarity on digital asset regulations.
The exchange filed a petition in July 2022, posing 50 questions to the SEC regarding how particular digital assets should be regulated. However, Coinbase has not received a response to its petition, leading to the exchange’s decision to take legal action.
In the limited legal action, the exchange has asked a federal court in the United States to order the SEC to respond “yes” or “no” to its petition. The exchange has highlighted the need for regulatory clarity in the cryptocurrency industry. If the SEC responds with a “no” to the rulemaking petition, Coinbase can contest the decision in court. The exchange believes that clarity is long overdue and that the situation has brought immense stress to the market.
“Regulatory clarity is overdue for our industry. Yet Coinbase and other crypto companies are facing potential regulatory enforcement actions from the SEC, even though we have not been told how the SEC believes the law applies to our business.”
What will happen after Coinbase gets a respond?
Coinbase has also revealed that over 1,700 entities and individuals have submitted comments to its petition, and with the Administrative Procedure Act (APA), the SEC is obligated to respond to Coinbase “within a reasonable time.” The exchange now seeks to hold the watchdog accountable for its lack of response.
It’s critical for the cryptocurrency sector to have regulatory certainty. Coinbase is not the only cryptocurrency company asking the SEC, as such. As a result, some crypto businesses have left the US in search of countries with more accommodating regulatory frameworks. As a statement to officials that the crypto community is not scared to hold them accountable, Coinbase’s plan to sue the SEC may mark a turning point for the sector.