Regulation
US SEC Says No to New Cryptocurrency Rules; Coinbase Asks Court to Review Them
WASHINGTON, Dec 15 (Reuters) – The U.S. Securities and Exchange Commission on Friday rejected a petition from Coinbase Global (COIN.O)New tab, opens a new tab demanding new rules from the agency’s digital assets industry, which the country’s largest cryptocurrency exchange then sought to challenge in court.
The five-member panel, in a 3-2 vote, said it would not propose new rules because it fundamentally disagreed that current regulations were “unworkable” for the cryptocurrency space, as Coinbase has argued. Coinbase later said it had filed a petition to have the SEC’s decision reviewed in court.
The dispute was the latest in a broader tug-of-war between the cryptocurrency industry and the top U.S. market regulator, which has repeatedly said that most cryptocurrency tokens are securities and subject to its jurisdiction. The agency has sued several cryptocurrency companies, including Coinbaseto list and trade crypto tokens which it says should be registered as securities.
“Existing laws and regulations apply to cryptocurrency securities markets,” SEC Chairman Gary Gensler said in a separate statement supporting the decision.
Coinbase disputed this claim.
“No one who looks impartially at our industry thinks the law is clear or that there is no more work to be done,” Chief Legal Officer Paul Grewal said in a statement. “We should work together to create laws and rules that will benefit American consumers and innovation.”
Shortly thereafter, Coinbase notified the federal appeals court in Philadelphia of its intention to seek review of the SEC’s denial.
The SEC’s decision was “arbitrary and capricious” and an “abuse of discretion,” Coinbase said in a court filing shared by Grewal on the social media platform X.
In 2022, the company lobbied the SEC to create a set of rules tailored to the cryptocurrency industry, arguing that current U.S. securities laws are inadequate. In April, Coinbase he appealed to a judge to force the SEC to respond to the petition.
The court said it would not force the agency to act, as the SEC had said it would respond to Coinbase’s petition.
Cryptocurrency firms have said they want a clearer idea of when the SEC considers a digital asset a security.
In his statement on Friday, Gensler argued that by asking the SEC to write rules, Coinbase had acknowledged the SEC’s authority over the cryptocurrency industry, which the cryptocurrency exchange has denied in the past.
Republican SEC commissioners Hester Peirce and Mark Uyeda jointly said they disagreed with the decision.
“In our view, the petition raises issues presented by new technologies and other innovations, and addressing these important issues is a critical part of being a responsible regulator,” they said.
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Reporting by Michelle Price and Mike Scarcella in Washington and Chris Prentice in New York; Editing by Chizu Nomiyama, Paul Simao and Diane Craft, Kirsten Donovan
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