Crypto exchange, Coinbase, has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) over a rulemaking petition that the company filed last year. The lawsuit, which was filed on Monday, accuses the SEC of failing to respond to Coinbase’s rulemaking petition within the required timeframe.
The lawsuit, filed in the United States District Court for the Northern District of California, alleges that the SEC’s failure to respond to Coinbase’s rulemaking petition is a violation of the Administrative Procedure Act (APA). According to the lawsuit, the SEC had 180 days to respond to Coinbase’s petition, but failed to do so.
Coinbase’s rulemaking petition, which was filed in December 2022, asked the SEC to provide clear guidance on how crypto assets should be regulated. The petition specifically asked the SEC to provide guidance on the classification of digital assets, the registration requirements for crypto exchanges, and the application of securities laws to crypto assets.
In its lawsuit, Coinbase argues that the lack of clear guidance from the SEC has created uncertainty in the crypto industry and has hindered innovation. The lawsuit also notes that the lack of clear guidance has made it difficult for Coinbase and other crypto exchanges to comply with existing regulations.
Coinbase CEO Brian Armstrong commented on the lawsuit in a series of tweets on Monday.
We filed this lawsuit because we believe it’s important for the industry to have regulatory clarity. Without it, it’s impossible for companies like Coinbase to innovate and grow.
Armstrong also noted that the lack of clear guidance from the SEC has led to a “regulatory vacuum” in the crypto industry. “This vacuum has resulted in companies like Coinbase being forced to make decisions in a regulatory gray area, which is not good for anyone,” Armstrong tweeted.
Coinbase’s lawsuit has been met with mixed reactions from the crypto community. Some have praised the company for taking action to push for regulatory clarity, while others have criticized the company for suing the SEC.
In a statement to CNBC, SEC spokesperson John Nester said that the agency is “aware of the lawsuit and will respond as appropriate.” Nester also noted that the SEC has been “actively engaged” with the crypto industry and has taken a number of actions to regulate the space.
The lawsuit comes at a time when the crypto industry is facing increased scrutiny from regulators around the world. Last week, the Financial Stability Oversight Council (FSOC) in the United States issued a report warning of the potential risks posed by the crypto industry.
The report noted that the crypto industry has grown rapidly in recent years, but also highlighted a number of risks, including the potential for fraud and market manipulation. The report also noted that the lack of clear regulatory guidance has contributed to the growth of the industry, but has also created uncertainty.
Coinbase’s lawsuit is likely to be closely watched by the crypto industry, as it could set a precedent for how crypto exchanges and other companies in the space interact with regulators. The lawsuit could also have implications for the broader regulatory landscape for crypto assets in the United States and around the world.
As the crypto industry continues to grow and evolve, it is clear that regulatory clarity will be essential to ensuring that the industry can continue to innovate and grow. Whether Coinbase’s lawsuit will ultimately succeed in pushing the SEC to provide clear guidance on crypto regulation remains to be seen, but it is clear that the crypto industry will be closely watching the outcome of the case.