In a recent development, a U.S. appeals court has instructed the U.S. Securities and Exchange Commission (SEC) to provide a response to a regulatory clarification petition submitted by leading U.S. cryptocurrency exchange Coinbase. Paul Grewal, Coinbase’s Chief Legal Officer, confirmed that the court has issued a written order mandating the SEC to respond within 10 days. Following the SEC’s response, Coinbase will have seven days to reply.
The background of this case involves Coinbase filing a limited lawsuit against the SEC in April, seeking clarification on regulations pertaining to the virtual currency industry. The company had previously submitted a petition to the SEC in July 2022, supported by over 1,700 groups and individuals, advocating for the development of a robust regulatory framework. The petition argued that cryptocurrencies classified as securities require new rules to ensure safe and efficient practices.
Criticism has been directed at the SEC for taking enforcement actions against the cryptocurrency industry without offering clear public responses or regulatory guidelines. James Murphy, a securities law specialist, noted that the swift court order does not guarantee Coinbase’s victory in the case. Murphy further expressed skepticism about the SEC readily accepting Coinbase’s requested rule-making process, suggesting that the SEC may argue for more time to consider the petition or seek dismissal of Coinbase’s lawsuit.
This court-ordered response from the SEC marks an important step in Coinbase’s pursuit of regulatory clarity and sets the stage for further legal proceedings in this high-profile case.