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SEC responds to Coinbase's proposal for new regulations: Exchanges should comply with existing laws, SEC to provide "suggestions" within four months

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SEC responds to Coinbase

The SEC has yet to respond to Coinbase's petition last year requesting guidance for the cryptocurrency industry, and has dismissed Coinbase's move to compel the SEC to respond within a deadline. In its latest response, the SEC reiterated that Coinbase's request is meaningless, further pointing out that Coinbase has violated longstanding regulatory standards, and that there is no contradiction between Coinbase's request and the SEC's potential revision of current regulations.

SEC Delays Response to Coinbase Petition

As early as July 21st last year, Coinbase sent a petition to the SEC requesting the establishment of regulations for cryptocurrencies.

However, not only has the SEC delayed its response to Coinbase's petition, but it has also issued Wells Notices to Coinbase and initiated enforcement investigations thereafter.

SEC Launches Investigation in March: Post-market Plunge by 12%! Coinbase Investigated by SEC, Coinbase's Pledges and Wallet Services May Involve Securities

Coinbase Sues SEC under Administrative Procedure Act

In April of this year, Coinbase filed a lawsuit against the SEC under the U.S. Administrative Procedure Act, demanding that the SEC provide an answer on whether they are willing to establish cryptocurrency regulations.

Coinbase's Chief Legal Officer, Paul Grewal, emphasized at the time that it is abnormal for a U.S. regulatory agency to take multiple enforcement actions based on legal views that have not been shared with the public.

Coinbase even brought in Eugene Scalia, the 28th U.S. Secretary of Labor, as an external lawyer.

However, before receiving a response from the SEC, Coinbase was instead hit with a civil lawsuit by the SEC, accusing them of blending traditional securities roles, listing tokens, and pledge services that involve unregistered securities.

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SEC: No Response Needed

According to legal documents, the SEC made the following statements:

  • Coinbase should comply with existing legal regulations.

  • No decision has been made yet on whether to respond to the petition.

  • Coinbase's violation of long-standing regulatory standards does not contradict whether the SEC will modify the current system.

Although the SEC expects to take 120 days to respond to Coinbase's request for the establishment of digital asset regulations, what they want to emphasize is that they are not required to respond to the petition, and Coinbase's request for a deadline response is completely unfounded.

The SEC stated:

Coinbase's motion for a mandatory injunction requiring the SEC to respond to the petition within seven days is entirely meaningless, as the SEC has not yet decided whether to take any action on the petition. Coinbase may now realize the weaknesses of the petition, prompting the court to request the SEC to regularly report the latest developments to the court. Nevertheless, the SEC still expects its staff to "make recommendations" on Coinbase's rulemaking within the next 120 days.

Coinbase's Chief Legal Officer, Paul Grewal, condemned the SEC for this on Twitter, raising several points:

  1. The SEC reiterates that they have not established any new relevant cryptocurrency regulations.

  2. Despite clear orders from the court, the SEC refuses to commit to any specific dates.

  3. The SEC's response ignores the clear statement by the SEC Chairman that there is no intention to issue new cryptocurrency regulations.