Coinbase Fights SEC for Clear Crypto Rules in Court Appeal

Coinbase is pushing back against the U.S. Securities and Exchange Commission's (SEC) refusal to create new regulations for the digital asset industry. On Monday, Coinbase's lawyers appealed to the Third Circuit Court of Appeals to reverse the SEC's decision and to order the agency to start developing rules.

Coinbase accuses the SEC of trying to control the growing digital asset sector through enforcement rather than by setting clear regulations. The exchange claims the SEC unfairly denied its June 2022 request for rulemaking, leaving companies in a difficult situation.

They're expected to follow SEC rules, which are unclear because the SEC hasn't established a regulatory framework.

The SEC's rejection of Coinbase's request, by a 3-2 vote in December 2023, was defended by SEC Chairman Gary Gensler, who argued digital assets already fall under existing regulations.

However, Commissioners Hester Peirce and Mark Uyeda disagreed, stating that addressing the challenges new technologies pose is crucial for responsible regulation.

Coinbase argues the SEC's decision is an overstep and violates the Administrative Procedure Act. This appeal is part of a broader conflict with the SEC, which also includes a lawsuit in New York where the SEC accuses Coinbase of operating without proper registration.

The outcome of Coinbase's motion to dismiss this lawsuit is still pending. Coinbase's legal challenges highlight the industry's broader fight for clear, applicable regulations in the rapidly evolving digital asset space.