SEC Responds to Coinbase: Crypto Regulations Could Take Years

The Securities and Exchange Commission (SEC) has responded to Coinbase’s complaint. The largest US crypto exchange sued the SEC on April 25, seeking clarity on crypto regulation. The company filed a petition for writ of mandamus, which requires the SEC to respond within a reasonable time.

In the filing, Coinbase asks the SEC to formally clarify “which digital assets should be registered as securities.” Furthermore, the court required the SEC to answer simply “yes or no” to the question of whether it would impose regulations on the crypto industry.

SEC Responds to Coinbase Complaint

Late Monday night (EST), the US regulator released its response, and the answer is once again more than disillusioning for the crypto community. Paul Grewal, Chief Legal Officer (CLO) of Coinbase wrote via Twitter that the SEC’s response is “probably an underwhelming one”.

According to him, today’s filing may be the first time that the SEC has formally expressed its views on whether and how the SEC will rule in court for the crypto industry. The SEC told the court that crypto rulemaking could take years and is not “in a hurry”.

In addition, the SEC acknowledged that it will continue to use enforcement actions as an option for rulemaking for the foreseeable future. In this regard, Grewal says ironically, “But not to worry – those enforcement actions may eventually be ‘informed’ by what is not yet planned.”

The SEC also alleges that Coinbase has no authority to direct the regulator to fulfill certain duties:

Perhaps recognizing this, Coinbase insisted that this Court should compel the Commission to act on Coinbase’s recently filed petition. But no statute or regulation requires the Commission to take such action on any specific timeline.

In addition, the SEC wrote in its answer brief to the court that Chairman Gensler’s public statements are not formal SEC guidance or policy statements and the public may not rely on them. So Grewal’s conclusion is devastating:

Overall the SEC’s response reinforces Coinbase’s long-standing concern that our industry lacks clarity on what the SEC may consider to be within or outside its jurisdiction at any given time, and that I am likely to change my mind.

However, Grewal also announced in a tweet that Coinbase will take the opportunity to formally respond to the SEC’s letter next week. It remains to be seen what the next steps are for Coinbase and whether the writ of mandamus could bring anything beneficial to the crypto industry.

The entire crypto market is currently at a turning point price-wise. The total market capitalization is $1.098 trillion, just above the support line at $1.081 trillion. During the previous selloff, the 200-day EMA acted as an important support.

Featured Image from Wccftech, Chart from TradingView.com