Coinbase clashes with US SEC in court over crypto regulations
Coinbase and the U.S. securities regulator faced off in a federal appeals court in Philadelphia on Monday, with the crypto exchange pressuring the agency to create new rules for digital assets.
Coinbase, the largest US cryptocurrency exchange, filed a lawsuit against the Securities and Exchange Commission last year in an attempt to force the regulator to take action on a regulatory petition Coinbase filed in 2022.
That petition called on the SEC to clarify the circumstances under which a digital asset is a security and to create a new market structure framework compatible with cryptocurrencies.
The SEC denied Coinbase’s request for new regulations in December 2023. According to the SEC, the SEC fundamentally disagreed that the current regulations are “unworkable” for the crypto sector.
Coinbase asked a federal appeals court on Monday to overturn that denial, arguing that the SEC made it impossible for the crypto company to operate and comply with U.S. regulations.
Coinbase attorney Eugene Scalia told the three-judge appeals court that the SEC had been arbitrary and capricious by failing to provide Coinbase with further explanations about how to register with the agency and how to comply with U.S. law.
An attorney for the SEC argued that the agency is not required to create new rules for the industry and that existing rules should be sufficient.
“If Coinbase chooses to conduct its business in a manner that does not comply with the existing regulatory framework, that does not give it the right to change the framework to accommodate its business,” said SEC attorney Ezekiel Hill.
The three-judge appeals court panel heard arguments from both sides, noting that the SEC has discretion in setting regulatory priorities but also asking the regulator why cryptocurrency wasn’t among them.
The dispute is the latest in a broader tug-of-war between the crypto industry and the U.S. market’s top regulator, which has repeatedly said most crypto tokens are securities and fall under its jurisdiction. The agency has sued several crypto companies, including Coinbase, for listing and trading crypto tokens that it says should be registered as securities.
Coinbase denies these allegations and is fighting them in a separate lawsuit.
The crypto industry largely believes that it exists in a gray area not governed by existing U.S. securities laws, and that new legislation is needed to regulate the sector.
© Thomson Reuters 2024
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
