Coinbase pushes SEC for clarity on crypto rulemaking

• Coinbase has been seeking a clear response from the SEC concerning its rulemaking petition, which was initially filed in July 2022.
• The latest response from Coinbase criticized the SEC, stating that its report was nothing more than “bureaucratic pantomime.”

In a continued effort to push the United States Securities and Exchange Commission (SEC) to respond to Coinbase’s crypto rulemaking petition, the company’s chief legal officer, Paul Grewal, called for a mandamus within 30 days to compel the SEC.

The SEC had submitted a status update on 12 October, but it was vague, stating that “commission staff provided a recommendation” without further details.

Since July 2022, Coinbase has been pressing the SEC for a definitive answer regarding its rulemaking petition. This petition urged the SEC to set regulations for the cryptocurrency market, specifically defining the digital assets that should be classified as securities.

After months of waiting for a response, Coinbase filed a petition for mandamus, seeking a decisive “yes or no” answer from the SEC.

Grewal expressed his dissatisfaction with the SEC’s response. Coinbase filed its response to the SEC’s update with the U.S. Court of Appeals for the Third Circuit, asserting that the SEC has deliberately avoided addressing Coinbase’s requests.

A speedy SEC response – The need of the hour?

The response from Coinbase criticized the SEC, stating that its report was nothing more than “bureaucratic pantomime” and claimed that the SEC had resolved not to conduct the requested rulemaking.

The response also highlighted the SEC’s use of bureaucratic tactics to delay judicial review. The company expressed frustration over the SEC’s reluctance to fulfill its obligations, and the ongoing back-and-forth has led to legal action.

Coinbase filed the initial rulemaking petition in 2022, and as the SEC failed to respond promptly, the company sought legal remedies through a mandamus petition.

The SEC, in turn, has opposed Coinbase’s efforts and requested additional time to respond to the rulemaking petition, asking for a 120-day extension. This timeline suggests that the agency may provide an answer by the end of October or early November.

SEC decides against pursuing Grayscale

Meanwhile, the SEC has reportedly opted not to engage in another legal battle with Grayscale Investments, allowing the deadline for an appeal to expire. This decision means the SEC will need to cooperate with Grayscale on its application for a spot Bitcoin [BTC] exchange-traded fund (ETF).

Historically, the SEC has rejected all spot Bitcoin ETF applications, but the recent judgment in the Grayscale versus SEC case has offered hope for approval. While this move is promising, the SEC retains the right to deny the application.