As set out by the Administrative Procedure Act, Coinbase has filed a lawsuit against the US Securities and Exchange Commission (SEC), asking the court to force this regulator to respond to its 2022 rulemaking petition.
Coinbase, in July 2022, filed a petition for rulemaking with the SEC, in which it urged the regulator to provide regulatory clarity around how existing securities laws might apply to digital assets. The exchange also expects the SEC to answer 50 questions about transparency for crypto regulation, which focuses on the classification of which tokens are securities.
Under the Administrative Procedure Act, the SEC is responsible for resolving Coinbase’s petition within a reasonable period of time. However, it has been 9 months and Coinbase still has not received the answer from the SEC. Answering questions and issuing new rules for crypto will benefit US capital markets, Coinbase said.
“We are simply requesting that the Court order the SEC to respond at all, which they are legally obligated to do. It’s important for the SEC and any other agency petitioned for rulemaking to respond to the petition once the agency has made up its mind, especially if the answer is no. Otherwise, the public can never exercise its right to ask a court if the agency’s decision was proper”, Coinbase’s Chief Legal Officer – Paul Grewal added.
This lawsuit is not the only legal battle between Coinbase and the US government. Besides the SEC’s investigation into potential violations of US securities law, Coinbase was funding a lawsuit against the US Department of the Treasury to block sanctions barring Americans from Tornado Cash, a virtual currency mixer accused of helping hackers launder proceeds for cybercrimes.
Coinbase CEO Brian Armstrong said he may consider leaving the US if the country still does not provide clearer regulations for the crypto industry. Moreover, Coinbase is planning to open a derivatives exchange outside of the US, and most likely in Bermuda.