Coinbase Appeals SEC Rejection on Crypto Classification
Coinbase continues its pursuit of comprehensive cryptocurrency legislation, particularly concerning its classification as securities. Despite the United States Securities and Exchange Commission’s rejection of Coinbase’s rulemaking petition on December 15 regarding cryptocurrency, the exchange promptly appealed this decision.
Paul Grewal, Coinbase’s chief legal officer, committed to taking swift action upon learning of the SEC’s denial. Subsequently, on December 18, the U.S. Third District Court of Appeals directed the SEC to submit the record of its decision by January 24, 2024.
In its appeal, Coinbase outlined the extensive measures taken to prompt the SEC’s response to its petition. It characterized the SEC’s rejection of its petition as “arbitrary and capricious, an abuse of discretion, and contrary to law, in violation of the Administrative Procedure Act.” Moreover, Coinbase stated:
“The Commission’s refusal to engage in rulemaking, even while it continues a campaign of regulation by enforcement against Coinbase and others that exceeds its statutory authority, flouts the APA [Administrative Procedure Act] and fundamental principles of fairness it embodies.”
The SEC’s rejection letter cited the Coinbase petition for its absence of “text or the substance of any proposed rule,” a requirement for such petitions. Additionally, it countered the petition’s assertion that current regulations were deemed “unworkable,” asserting the agency’s discretion in determining the priority and timing of regulations. The denial faced criticism from the cryptocurrency community.
Following the formal denial, SEC Chair Gary Gensler issued a statement.
Headquartered in San Francisco, Coinbase has undertaken numerous initiatives to support the cryptocurrency sector, including political contributions, lobbying efforts, and public engagements. The SEC filed a lawsuit against Coinbase for alleged securities violations in June.
