Coinbase (NASDAQ:COIN), the major cryptocurrency exchange, has expressed its frustration over the United States Securities and Exchange Commission's (SEC) lack of clarity regarding digital currencies. On Monday, the company accused the SEC of neglecting their responsibilities in the U.S. Court of Appeals for the Third Circuit. This follows a public demand by Paul Grewal, Coinbase's Chief Legal Officer, on Sunday for a detailed response from the SEC to a rulemaking petition about cryptocurrencies submitted by Coinbase last year.
Since July 2022, Coinbase has been pressing the SEC to establish clear guidelines for the cryptocurrency market, including defining which digital currencies are considered securities. After waiting nine months without a response, Coinbase demanded a mandamus - a legal directive - within one month. The SEC responded saying they had made a recommendation on Coinbase's appeal but did not disclose specifics. They also argued that they aren't obligated to fulfill Coinbase's demands.
Grewal criticized the SEC's delays and highlighted the need for a mandamus on social media platforms. He described the SEC's previous update as insufficient and insisted on a detailed response within a month. Coinbase maintains that an enforcement action was initiated against them by the SEC without defining how these laws apply to cryptocurrencies.
The company alleges that their rulemaking petition has been consistently ignored by the SEC for over a year. After this enforcement action, the court demanded that the SEC explain its denial of Coinbase's petition. The situation presents a catch-22 for digital asset firms: they are being asked to register or face legal action by the SEC, yet no clear guidance is given regarding when and how such registration should be carried out.
In response to Coinbase's plea for a mandamus, the SEC requested an additional 120 days to provide a comprehensive response and asked the court to reject Coinbase's plea. This could potentially lead to a decision by late October or early November.
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