Coinbase accuses SEC of continuing to 'hedge and delay' over its petition for new crypto rules

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Quick Take

Coinbase told a court on Wednesday that the SEC is dragging its feet over the crypto exchange’s ongoing request for new rules for the industry.

Coinbase used a Wednesday letter to the U.S. Court of Appeals for the Third Circuit to argue that the Securities and Exchange Commission is continuing to drag its feet in the crypto exchange's ongoing quest for new rules.

"Only an order by this Court will make the Commission act," Coinbase lawyer Eugene Scalia said in the letter, arguing that a recent update to the court from the SEC provided "no additional information about its progress" other than the promise of a further status report by Dec. 15.

"Although the agency's fear of a court ruling spurred it to do something, its proffer of another 'report' — as it continues to hedge and delay — confirms that only mandamus will impel the Commission to fully, finally acknowledge that Coinbase’s petition for rulemaking was pocket-vetoed long ago," Scalia continued.

Coinbase sued the SEC in April, following a petition last year requesting that the regulator draft new rules specific to digital assets. The SEC said in June that it wanted around four months to respond to the request from Coinbase.

"The Commission's consideration of the staff's recommendation on Coinbase's rulemaking petition is proceeding in accordance with the Commission's Rules of Practice," SEC lawyers wrote to the court in a letter dated Nov. 21.

Kraken lawsuit

Coinbase, meanwhile, told the court that a new lawsuit filed by the SEC against rival exchange Kraken was evidence that the regulator had already made up its mind that new rules were not necessary.

"The Commission's submission comes just a day after filing another lawsuit against a crypto exchange," Scalia wrote, saying the suit illustrated that "the SEC’s asserted need for more time to make up its mind is a mirage."

"The Kraken action was necessarily approved by the Commission and (like previously commenced suits against Coinbase and others) is further evidence that the Commission sees no need for regulatory clarity," he continued. "Its course is determined, and the Court should reject this latest empty gesture."

About Author

Anna is a senior policy reporter and assistant editor at The Block. She has a background in political journalism and covered Russian civil society for a range of news outlets in Moscow, including the award-winning newspaper Novaya Gazeta. Before joining The Block, Anna spent the past five years investigating cryptocurrency policies and adoption around the world at CoinDesk. Anna owns bitcoin and a gift NFT of sentimental value.