On Monday, the US Securities Exchange Commission (SEC) issued a report providing well-detailed responses to the Coinbase petition. Initially, Coinbase had demanded the SEC to provide regulatory clarity on crypto assets.
The SEC argued that implementing the Coinbase proposal would take longer than expected. In their submission, the SEC explained that the Coinbase proposal required a more complex approach to implementing the reforms.
Factors Contributing to Complexity in Rulemaking
Additionally, the SEC argued that the rulemaking process takes time compared to the duration allocated by Coinbase. They added that the SEC would not prioritize pursuing the Coinbase proposal.
Based on the court filing, the SEC urged the court to abandon the Coinbase mandamus report since it failed to meet judicial remedy requirements. The Coinbase petition fails to provide a useful solution to offer the “extraordinary remedy.”
Responding to the SEC claims, Coinbase chief legal officer Paul Grewal tweeted that the commission’s response was the first time they officially expressed their thoughts on crypto regulations. The tweet revealed that it was still uncertain whether creating a rule for cryptocurrency was important. Grewal added that the existing crypto regulation still requires more clarity.
Scope of Coinbase Petition
Reflecting on the SEC filing, the commission plans to adopt the enforcement approach instead of creating new regulations since the rulemaking process is time-consuming. In the long run, the SEC proposed enforcement actions will guide the commission in the rulemaking process.
The SEC responses coincided with the keynote speech issued by the commission’s chairperson Gary Gensler. Speaking at the Financial Market Conference, Gensler confirmed that the crypto rules already exist.
A few days ago, the SEC failed to engage in a further discussion concerning the statement issued by Gensler on the classification of crypto as either security or commodity. In a separate writing, Grewal argued that Gensler’s previous report failed to observe the commission’s policy statement.
He argued that the SEC’s final decision support Coinbase argument that the commission lacks sufficient clarification on crypto regulations. He predicts that the commission will continue changing its stance on crypto regulations.
SEC Respond to Coinbase Request
Citing the securities laws and Administrative Procedure Act (APA) requirements the SEC is required to formulate new regulations for cryptos. In an earlier announcement, the SEC requested the court not to force the regulators to amend the crypto regulations.
After examining the Coinbase petition, including the timeframe and requirement, the SEC observed that their delays in responding to the submission had a minimum impact.
Also, the SEC argued that their May 16 responses does not exclude the commission from the rulemaking process.In the meantime, the SEC will consider Coinbase submission as an ordinary course.