The United States Securities and Exchange Commission (SEC) has asked for four more months to reply to Coinbase’s request for more clarity on the regulation of digital assets, claiming that Coinbase’s lawsuit has “no merit.”
The debacle with the American regulatory agency started after the SEC issued a Wells notice to Coinbase, warning the company that it identified potential violations of U.S. securities law. In response, the cryptocurrency exchange filed a lawsuit in April, asking the court to order the SEC to respond to its petition for rulemaking, which contained 50 specific questions about how the SEC determines whether a token is a security or not.
Last week, the United States Court of Appeals for the Third Circuit had ordered the regulatory watchdog to respond to Coinbase’s pending petition for rulemaking within seven days, which was yesterday.
In its order, the court had recommended the American watchdog to clarify whether Coinbase’s rulemaking petition has been denied, and if not, then how much time would the SEC require to decide whether to deny or grant that petition.
SEC Says Coinbase Petition Has No Merit
In a June 13 letter submitted to the U.S. Court of Appeals for the Third Circuit, the SEC has asked for more time to reply to Coinbase’s request, specifying that it has not decided what action to take on the petition and that Coinbase’s lawsuit has no merit. The agency stated it needs an additional 120 days to reply to the exchange’s request as well as provide further clarity on the laws governing digital assets. The SEC wrote,
“There is no merit to Coinbase’s extraordinary request for a writ of mandamus to compel the Commission to act on Coinbase’s wide-ranging rulemaking petition within seven days. The Commission has also not decided what action to take on that petition in whole or in part.”
In response to the letter, Coinbase chief legal officer Paul Grewal criticized the SEC’s response, saying that it ignored the Court’s explicit order and refused to commit to any deadline. He also accused the American regulator of increasing enforcement and issuing warnings to crypto exchanges without providing clear guidance.
1) they repeat the fallacy that they haven't made any decision on new crypto rules; 2) they refuse to commit to any deadline despite the Court's explicit order; 3) they instead "anticipate" making a "recommendation" in 120 days; and most importantly… 2/5
— paulgrewal.eth (@iampaulgrewal) June 13, 2023
A Small Win For Crypto Against SEC
This comes at a time when the entire crypto ecosystem is in the thick of a heated war with the US SEC. Along with Coinbase, the regulatory watchdog had also filed a lawsuit against the world’s biggest cryptocurrency exchange, Binance and asked a Washington, D.C. federal judge to freeze the assets of Binance’s U.S., a subsidiary of the crypto exchange.
However, the federal judge overseeing the case against Binance and Binance.US declined to order a temporary restraining order freezing the U.S. trading platform’s assets. The move would allow Binance.US to continue doing business while negotiating restrictions with the regulator.
As per the latest hearing, Judge Amy Berman Jackson of the US District Court for the District of Columbia asked the two sides to reach a compromise over the asset freeze. She ordered both parties to continue negotiating and submit a status update by June 15.
Fight Against SEC Intensifies
Furthermore, the legal dispute between Ripple and the SEC has also heated up with the blockchain company making six additional filings, with one prominent filing voicing strong opposition to the request for summary judgment by the American financial watchdog.
As per the recent filings, Ripple claimed several inconsistencies in the SEC’s argument for which it wanted a summary judgment. The company further claimed that the market regulator has also not proven till date proven its theories regarding the XRP token.
U.S. capital markets must be protected from a tyrannical Chairman, including the current one. It’s time for real reform and to fire @GaryGensler as Chair of the SEC. Statement ⬇️ pic.twitter.com/0VUHxUAhtB
— Warren Davidson 🇺🇸 (@WarrenDavidson) June 12, 2023
Moreover, on June 12, United States Rep. Warren Davidson introduced the “SEC Stabilization Act” into the House of Representatives. One of the bill’s main provisions is to fire SEC Chair Gary Gensler and institute a restructuring of the financial regulator. Davidson also took to Twitter to take a jibe at Gensler noting,
“U.S. capital markets must be protected from a tyrannical Chairman, including the current one.”