Key Insights:
- Coinbase has filed a lawsuit against the SEC for failing to address its petition for regulatory clarity.
- The petition asked if the SEC would propose and adopt rules for securities traded through digital methods.
- CEO Brian Armstrong hinted that the firm might move its headquarters outside the U.S. unless regulatory policies are altered.
On Monday, Coinbase, the foremost digital currency exchange, initiated legal action against the SEC, pressing the regulatory agency to address a July 2022 plea for transparent guidelines. The request inquired about the SEC’s potential proposal and implementation of regulations for digital means of trading and offering securities. Unfortunately, the SEC ignored the plea, resulting in Coinbase taking further action.
Coinbase demands regulatory clarity from SEC
According to a blog post by Coinbase’s Chief Legal Officer, Paul Grewal, the reason for the rulemaking process is to allow agencies to formulate regulations with the input of the public and to have their position challenged through judicial review. Grewal further noted that the petition submitted by Coinbase has garnered over 1,700 comments from individuals and entities who share the same desire for regulatory clarity.
According to Paul Grewal, Coinbase’s chief legal officer, the actions and public statements made by the SEC in the cryptocurrency market suggest that the regulator had already made up its mind to reject the company’s petition, but it has not informed the public of its decision.
Coinbase has filed a petition in the U.S. Court of Appeals for the Third Circuit, which is seen as the latest move against the SEC. The regulatory body has been taking enforcement actions and issuing warnings against various crypto firms and entrepreneurs such as Bittrex, Gemini, Genesis, Justin Sun, and Do Kwon in recent months. Interestingly, the same day Coinbase filed its petition, the SEC threatened to sue the company over nine tokens that it claimed were unregistered securities.
Regulatory uncertainty prompts Coinbase’s relocation
The CEO of Coinbase, Brian Armstrong, has suggested that the company is exploring the option of relocating its headquarters from the US due to the current regulatory policies. Armstrong expressed that the company is open to any possibility, including moving its operations abroad, to overcome the regulatory hurdles.
Coinbase’s forthcoming financial report for the first quarter of this year on May 4 presents an occasion for analysts to evaluate the well-being of the digital assets sector, coinciding with the exchange’s legal action against the SEC.