Regulation
Coinbase says the SEC is “stifling” the cryptocurrency industry
Coinbase has stepped up its push for the US Securities and Exchange Commission (SEC) to initiate formal regulation of digital assets.
In its closing submission on May 31, the cryptocurrency exchange asked the appeals court to force the financial regulator to establish clear rules for the emerging sector.
Coinbase challenges SEC’s regulatory approach
Coinbase says that The SEC’s enforcement strategy leaves crypto companies in a “Catch-22”. The exchange argues that the SEC requires compliance with an overly broad interpretation of its authority as it pursues aggressive litigation against companies. Coinbase claims the SEC is imposing major policy changes through punitive measures, overstepping its bounds.
In its brief, Coinbase argues that the SEC’s approach violates the Administrative Procedure Act (APA), which mandates regulation for significant policy changes. The brief highlights that the SEC inconsistent policies There is no consistent legal standard on digital assets, making compliance unachievable for the industry.
“The SEC exploited [regulation-by-enforcement] approach to assert broad, but not well-defined, jurisdiction over a new and dynamic industry, without upfront articulating its understanding of the law through rules vetted by public comment and pre-enforcement judicial review,” Coinbase declared.
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Furthermore, Paul Grewal, Chief Legal Officer of Coinbase, reiterated this position on social media, underlining the importance of the legal battle. He argued that the Commission did not provide substantive reasons for rejecting the company’s request for tailored regulations. Instead, Grewal argued that the The SEC is overreaching with its authority without congressional authorization and establishing clear rules for the emerging digital asset sector.
“Surprisingly, the SEC says – over and over again – that it doesn’t matter if the industry can comply with the rules. The SEC is intent on stifling the digital asset industry and refuses to provide the necessary rules the industry requires to tighten the crackdown,” Grewal said. stated.
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Coinbase filed its regulatory petition against the SEC two years ago. Initially not responding to the petition, the regulator said it could not be forced to create specific cryptographic rules. However, Coinbase and other crypto stakeholders have consistently argued the lack of rules harms the industry. The outcome of this legal battle could have a major impact on the future of digital assets in the United States, influencing regulations for many years to come.
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