Coinbase and the US Securities and Exchange Commission renewed their legal tussle over the agency’s refusal to create specific rules for the crypto space. This legal confrontation in a Philadelphia appeals court highlighted the rift between the rapidly evolving crypto industry and US regulators.
Coinbase contended that the SEC's current regulatory framework is unsuitable for the crypto space, while the SEC maintains that its existing rules are sufficient for the industry, Reuters reported.
Coinbase Pushes for New Crypto Rules
The crypto exchange initiated the lawsuit after the SEC dismissed its 2022 petition for new rulemaking. The exchange argued that the current lack of clear guidance creates significant operational challenges.
Eugene Scalia, Coinbase’s legal representative, reportedly criticized the SEC for being arbitrary in denying clarity to the crypto industry. He stated that the exchange has been left without a practical way to comply with US laws, leading to significant operational uncertainty.
The SEC, however, sees things differently. It has argued that the regulator is not obligated to create new rules specifically for crypto. According to the SEC, the existing regulatory framework should be sufficient for digital assets.
This legal battle comes amid a broader fight between the crypto industry and US regulators. The SEC has repeatedly insisted that most crypto tokens should be treated as securities, thus falling under its regulatory authority.
Consequently, the agency filed lawsuits against various crypto firms, including Coinbase, accusing them of listing unregistered securities. Coinbase denied these accusations and is engaged in a separate legal case with the SEC regarding these allegations.
Future of Crypto Regulation
The federal appeals court judges have noted that the SEC has the discretion to prioritize its rulemaking. Nevertheless, they pressed the agency on why cryptocurrency hasn’t been a higher priority, given its growing significance. While the crypto industry seeks clarity, the SEC remains firm in its belief that digital assets should be governed by the existing securities laws.
Interestingly, the SEC recently requested an additional four months to produce documents in the legal matter involving Coinbase. In a motion filed with the US District Court for the Southern District of New York, the regulator said it required more time to review an extensive collection of 133,582 documents.
The SEC was reportedly scheduled to produce documents by October 18. However, it was argued that reviewing the extensive collection of documents required more time. This request, filed on September 18, aims to extend the deadline for fact discovery to February next year.
This article was written by Jared Kirui at www.financemagnates.com.
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