Diving brief:
- Cryptocurrency exchange Coinbase has asked a federal appeals court to require the Securities and Exchange Commission to establish new rules governing digital assets.
- Coinbase lawyer Eugene Scalia told the justices on Monday United States Court of Appeals for the 3rd Circuit The SEC did not explain its reasoning for rejecting Coinbase’s request for rules that would clarify the determination of when digital assets are securities, Reuters reported. The company wants the court to overturn the agency’s refusal.
- The agency, which largely views digital assets as securities, has taken legal action against a number of companies in the crypto sector. Scalia accused the agency of engaging in “extraordinarily oppressive government behavior” by launching coercive measures against businesses not offering them a way to register with the agency, Bloomberg reported.
Dive overview:
Monday’s arguments are the latest development in contentious exchanges between the regulatory agency and the company. The SEC has said it considers most crypto tokens to be securities, therefore falling under its jurisdiction, while the industry says existing securities laws do not apply to cryptocurrencies.
Coinbase has filed a petition for rulemaking in 2022, seeking to clarify which crypto assets are securities and how they should be regulated.
The company then the SEC continued in April 2023, to encourage the agency to respond to its petition. THE The SEC denied the company’s petition Last December, he disputed that applying existing securities laws and regulations to crypto assets was “impractical.”
Also, in June 2023, the The SEC sued Coinbasewhile loading it for operating an unregistered national securities exchange, broker-dealer and clearing agency, and also for failing to register the offer and sale of its staking program as a service. A judge said in March so that the matter can move forward.
Coinbase has long accused the SEC of regulation through enforcement. Scalia told the court on Monday that the SEC’s inconsistent approach had made it impossible for the company to comply with laws and regulations, according to Reuters.
SEC lawyer Ezekiel Hill, meanwhile, told the court that a new rule is not necessary for the crypto industry because existing regulations are sufficient.
“If Coinbase wants to organize its activities in a way that is not consistent with the existing regulatory framework, that does not establish the right to adapt the framework to accommodate its activities,” Hill said, according to the press service .
In response, the justices acknowledged that the SEC did not have to justify its denials, but they also pressed Hill on the agency’s position that details regarding crypto assets are not a priority. Axios reported. The justices did not issue a decision immediately after the proceedings Monday.
