Coinbase request for SEC rulemaking delayed for four months, citing a “weak claim”

Coinbase exchange had requested the SEC to make a rulemaking on digital asset trading at the earliest.
However, the agency pushed the determination a staggering 120 days before a response.
The decision has attracted massive criticism from Crypto Twitter, led by Coinbase CLO Paul Grewal.

Coinbase (COIN) request for the United States Securities and Exchange Commission (SEC) to expedite its rulemaking concerning digital asset trading has been met with massive disappointment.The financial regulator demanded a 120-day waiting period before a determination.

Also Read: Coinbase finds support from Third Circuit court against SEC as its stock COIN falls by 18%

Coinbase to wait four months before SEC rulemaking

Coinbase (COIN) must wait up to four months (120 days) before the SEC issues its rulemaking on digital asset trading. The exchange’s request for clarity in rulemaking was filed in 2022, more than a year before the SEC’s recent legal suit against Coinbase on June 6. In April, the largest cryptocurrency exchange in the US sued the SEC, asking for a response to its 2022 request for rulemaking.

In case you missed it, the case sprouts from a prolonged dispute between the crypto industry and the financial markets regulator over which digital assets should be considered security investments, subject to existing registration and transparency requirements, or exempted on the argument that they do not fall neatly into those existing laws.

After the SEC’s recent charge against Coinbase, the court gave the regulator up to seven days to clarify its position concerning the exchange. However, the regulator has communicated otherwise, saying no decision has been made concerning Coinbase’s request for an expedited response.

The SEC attributes this delay to the “weakness” of the exchange’s claim, maintaining that the petition ought to be denied.

Neither the securities laws nor the Administrative Procedure Act imposes on the Securities and Exchange Commission an obligation to issue the broad new regulations regarding “digital assets” Coinbase has requested.

According to the SEC, the commission is not obligated to issue new regulations, and Coinbase has no standing to sue the agency. Moreover, the regulator holds that digital asset rules exist, asking the industry to remain mindful of its regulations and laws.

Coinbase CLO attacks the SEC

Coinbase Chief Legal Officer Paul Grewal has attacked the financial regulator for the disappointment, saying the SEC continuously refused to commit to a deadline, thereby defying court orders.

1) they repeat the fallacy that they haven't made any decision on new crypto rules; 2) they refuse to commit to any deadline despite the Court's explicit order; 3) they instead "anticipate" making a "recommendation" in 120 days; and most importantly... 2/5
— paulgrewal.eth (@iampaulgrewal) June 13, 2023

Further, Grewal has also called the agency out for overlooking statements made by SEC Chair Gary Gensler, which only goes to show that they have no intention to issue new rules.

4) they ignore the clear statements of the Chair that confirm they have no intent to issue new rules, and instead conflate the evidence of a decision those statements provide with an argument that the statements are themselves a decision. 3/5
— paulgrewal.eth (@iampaulgrewal) June 13, 2023

According to the CLO, this is why the agency continues to truncate the evidence of a decision provided within the statements, alluding that those statements are actually a decision.

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