The post SEC’s Firm Stance On Its Denial To Coinbase’s Rule-Making Petition appeared first on Coinpedia Fintech News

In the ongoing legal saga between Coinbase and the SEC, Coinbase has challenged the SEC’s denial over its rule-making petition where the SEC firmly holds its stance that there is no necessity to replace existing security regulations. Coinbase believes that the current regulatory landscape is not working for the crypto and has filed a petition to establish a new regulatory framework customized specifically for crypto. 

Coinbase’s Rulemaking Attempt Futile; Says SEC

The SEC recently stated in a  filing that Coinbase’s efforts to create reasons for urgent rulemaking are pointless. SEC stands by its decades-old regulatory framework and notes that the framework continues to effectively protect investors, maintain market integrity, and facilitate capital formation. It also stated that the Commission has not changed its position regarding its authority over crypto securities, as was claimed by Coinbase. 

Coinbase has requested permission from the court to appeal, questioning whether the long-standing Howey test should be applied to digital assets. However, it is hopeful that the test will not be applied. This comes in the light of SEC’s accusation that Coinbase operates as an unregistered broker, exchange, and clearing house in the US, as according to regulators, cryptocurrencies that meet the criteria of the Howey Test and are considered securities need to be registered.

Coinbase Pivoting From Its Legal Question?

The SEC also argued that Coinbase was trying to create a new legal test for how crypto might fit into existing securities given that a district court judge had already rejected it. SEC also stressed on the point that while Coinbase’s appeal focuses on a specific legal question regarding the ‘contractual obligation’, its argument on the application of the Howey Test to crypto is completely different. 

Once again, Coinbase’s Chief Legal Officer, Paul Grewal, has criticized the SEC for its inconsistency. This time, he’s highlighting the SEC’s opposition to Coinbase’s request for an Interlocutory Appeal. This comes after the SEC previously denied Coinbase’s Motion to Dismiss (MTD).

The filing also stated that the Commission has carefully considered Coinbase’s petition and has reasonably determined that the requested rulemaking was not justified in light of ongoing regulatory initiatives and competing regulatory priorities. But if the Court finds that explanation insufficient, a remand, at the most would be proper and not on order compelling the SEC to undertake rulemaking.

Given the perceived SEC’s negative outlook on the crypto industry over compliance issues and its recent regulatory tussles between giant crypto players, it’s worth watching how the regulatory narrative will unfold.

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