Coinbase challenges SEC to respond to rulemaking petition

Crypto exchange Coinbase filed a challenge in federal court to force the Securities and Exchange Commission (SEC) to issue a response to the exchange’s July 2022 petition.

Back then, Coinbase submitted a petition to SEC for the authority to establish and implement clear rules for the digital assets sector. The exchange asked SEC to answer 50 specific questions, focusing on the classification of certain digital assets as securities.

The petition goes:

It is widely recognized – including by a sitting SEC Commissioner – that existing SEC registration and disclosure requirements are incompatible with digital assets, which differ fundamentally from the stocks, bonds, and investment contracts for which the securities laws were designed and that the SEC traditionally has regulated. The SEC at a minimum must set forth how those inapt and inapposite requirements are to be adapted to digital assets. But the SEC has refused to do even that.

However, the petition has been pending since July, and now Coinbase is stepping up its push to get a “yes-or-no” answer from SEC, i.e., whether the authority is willing to create a clear regulatory framework for the crypto industry.

From the SEC’s public statements and enforcement activity in the crypto industry, it seems like the SEC has already made up its mind to deny our petition. But they haven’t told the public yet. So the action Coinbase filed today simply asks the court to ask the SEC to share its decision.

Chief Legal Officer at Coinbase, Paul Grewal, adds:

Grewal clarified in an interview with Fortune that Coinbase’s latest move is independent of the Wells Notice, but is part of ongoing legal efforts to protect the company and the cryptocurrency industry in the U.S., which is facing increasing regulatory scrutiny.

Related: Coinbase receives Wells notice

Grewal said to Fortune:

We’re not going to court lightly. Because we’re absolutely convinced the SEC is violating the law, we feel like we have no choice but to take them to court.