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The American cryptocurrency exchange Coinbase faced off with the U.S. Securities and Exchange Commission (SEC) in a federal appeals court on Monday (Sep. 23) over crypto regulations.
This back-and-forth started when Coinbase filed a lawsuit against the SEC in 2023.
The company asked them to act on its 2022 petition which requested the Commission to “propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods, including potential rules to identify which digital assets are securities.”
The petition was then denied by the SEC in December of 2023, with the crypto exchange asking, on Monday, a federal appeals court to overturn that denial.
Three-judge appeals court heard arguments from Coinbase and US SEC
According to Reuters, Eugene Scalia who is a lawyer for Coinbase, told the three-judge appeals court that the SEC had been arbitrary and capricious in not giving Coinbase more answers on how to register with the agency and comply with U.S. laws.
In response, a lawyer for the SEC was reported as arguing that the agency is not required to create a new rule for the sector and that existing regulations should suffice.
“If Coinbase wants to arrange its business in a way that does not comply with the existing regulatory framework, that does not establish a right to have the framework adapted to meet their business,” Reuters reports SEC lawyer Ezekiel Hill as having said.
The three appeals court judges heard arguments from both sides on Monday, noting that the SEC does have discretion in rulemaking priorities.
After the events of the day, the Chief Legal Officer at Coinbase Paul Grewal took to X to share the details.
Today @coinbase made oral arguments before the Third Circuit in our case against @SECgov’s repeated arbitrary and capricious denial of our petition for rulemaking, which we originally put forward over 2 years ago. Here’s the original petition: https://t.co/k0n2wwaBU9 1/5
— paulgrewal.eth (@iampaulgrewal) September 23, 2024
He said: “@SECgov refuses to provide a reasonable explanation for its barebones denial, yet it has wielded its purported authority to engage in an arbitrary enforcement campaign against our industry.”
After saying that “regulation by enforcement does nothing but damage American consumers, innovation, US competitiveness, and our national security” Grewal went on to thank the court.
He also said, “Coinbase is determined to leave no stone unturned in our efforts to get clarity for our industry and the millions of Americans who hold crypto.”
Featured Image: Via Midjourney
