In response to Coinbase’s request for a rulemaking petition, the SEC argued that “No statute or regulation requires the Commission to take such action on a specific timeline,” asking the court to deny the mandamus filing.
The exchange’s accusations that the Commission has secretly decided to deny the petition but is withholding its decision in order to avoid judicial review were similarly dismissed by the US regulator as unfounded.
Next, SEC defended its enforcement action against Coinbase and others saying “Agencies routinely enforce existing rules while considering further amendments to regulatory requirements.”
The chair of the United States Securities and Exchange Commission Gary Gensler has hit back at Coinbase’s petition forcing the agency to provide a clear stance on crypto regulation, asserting that there are already adequate laws in place.
The commission’s latest response came after Third Circuit ordered the regulator to respond to Coinbase’s second Writ of Mandamus within 10 days.
On April 24, the trading firm filed a narrow action in federal court to compel the SEC to respond yes or no to its July 2022 petition.
The July 2022 petition asked that the SEC “propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods,” referring to digital assets like cryptocurrencies.
“The SEC is required by law to respond to petitions within a reasonable time, but they have not yet responded to our petition from last July, which is why we filed our action in court today.” Paul Grewal wrote in the Twitter thread.
Another interesting point brought up by the SEC was that Chair Gensler’s public statements on digital assets should not be taken as official guidance or policy declarations from the agency.
Coinbase- SEC Distance Itself Away From Gensler’s Comments
This is crucial because Gensler was asked about the dispute with the crypto exchange, the rules on crypto, and why “the SEC doesn’t publish rules for that market,” during a May 15 keynote speech at the Financial Markets Conference.
He still insists that “the rules have already been published.” With the exception of Bitcoin, the majority of crypto assets, in the SEC chair’s current opinion, fall under the securities definition of an investment contract.
“If the public is investing money and anticipating profit based upon the efforts of others, in a common enterprise, that’s a security,” Gensler said, adding:
“There’s financial intermediaries, nodes in the network, and they need to come into compliance if they’ve got securities on their platforms.”