Coinbase Global Inc., one of the largest cryptocurrency exchanges in the United States, has filed a lawsuit against the US Securities and Exchange Commission, requesting that the regulatory agency respond to its months-old petition on the calling for clear guidelines for cryptocurrencies.
The SEC ensures that federal law is enforced against market manipulation.
Because the cryptocurrency market is relatively new and with bankruptcy filings from prominent cryptocurrency exchanges causing skepticism, regulators began enforce some of its laws on digital currency exchanges.
In its July 2022 petition, Coinbase asked the SEC "that the commission propose and adopt rules to govern the regulation of securities that are offered and traded through digital native methods."
The government regulator has yet to respond to the petition filed as of May 2.
But, the SEC sent Coinbase a โNotice from Wellsโ letter months after filing the petition. The agency informed the company that violations were discovered and that it would take legal action.
In response to Wells' notice letter, Coinbase archived a motion to the US Court of Appeals for the Third Circuit Court asking "That the court order the SEC to answer at all."
Coinbase filed the motion under the Administrative Procedure Act, requiring the SEC to respond to the petition.
"Coinbase and other cryptocurrency companies are facing potential enforcement action from the SEC, although they have not told us how the SEC believes the law applies to our business," Paul Grewal, Coinbase's chief legal officer, wrote in a blog post. "The rulemaking process is a critical step in giving the public notice of activities in which they can and cannot participate."
Conditionally, Brian Armstrong, Co-Founder and CEO of Coinbase, tweeted that the exchange is "committed to building in the US and around the world," standing up for itself and upholding the rule of law.
The SEC also involved in numerous legal disputes with other cryptocurrency firms such as Ripple, Genesis, and Gemini.
Bittrex, another cryptocurrency exchange, Announced would shut down operations in the United States, citing that a lack of regulations makes it challenging to achieve the company's goal of maturing the cryptocurrency space.
The executives expressed concern that the lack of regulations around cryptocurrencies would cause the United States to lag behind other countries that are more accepting of cryptocurrencies.
โEurope is really emerging as a leader in terms of setting really clear regulations and rules that allow cryptocurrency companies and also traditional finance to embrace cryptocurrencies,โ said Ripple President Monica Long. CNBC. "MiCA, the set of rules established by 27 countries that have come together to establish a common framework which is notable when the US has a government and they can't act together."
During his "office hour" video series, SEC Chairman Gary Gensler expressed concern for investors in the market, quoting that "the lack of compliance of these crypto platforms means you don't have basic investor protections."
โI think we continue to see the SEC play this game of punishing people who are still surviving,โ said Nicolas Cary, president of Blockchain.com. CNBC. "And it's a bit, you know, a frustrating thing to watch."
