The US Securities and Exchange Commission on Friday rejected Coinbase Global’s petition seeking new rules from the agency for the digital asset sector, which the country’s largest crypto exchange said it plans to challenge in court. .
The five-member commission said in a 3-2 vote that it would not propose new rules because it fundamentally disagrees that existing rules are “impractical” for the crypto sector, as Coinbase has argued. The firm later informed an appeals court that it planned to seek judicial review of the SEC’s decision.
The dispute was the latest in a broader tug-of-war between the crypto sector and the top US markets regulator, which has repeatedly said most crypto tokens are securities and subject to its jurisdiction. The agency has sued several crypto companies, including Coinbase, over the listing and trading of crypto tokens, which it says should be registered as securities.
“Existing laws and regulations apply to crypto securities markets,” SEC Chairman Gary Gensler said in a separate statement supporting the decision.
Coinbase denied that claim.
“Nobody looking at our industry objectively thinks the law is clear or that there isn’t more work to do,” Chief Legal Officer Paul Grewal said in a statement. “We must work together to create laws and regulations that benefit consumers and American innovation.”
Shortly thereafter, Coinbase notified a federal court of appeals in Philadelphia of its plans to seek review of the SEC’s denial.
In 2022, the company pressured the SEC to create a specific set of rules for the crypto sector, arguing that existing US securities laws are inadequate. In April, Coinbase appealed to a judge to force the SEC to respond to the petition.
The court said it would not force the agency to take action, as the SEC had said it would respond to Coinbase’s petition.
Crypto firms have said they want a clearer idea of when the SEC views a digital asset as a security.
In his statement on Friday, Gensler argued that by asking the SEC to write the rule, Coinbase was accepting the SEC’s authority over the crypto sphere, which the crypto exchange had rejected in the past.
Republican SEC Commissioners Hester Pierce and Mark Ueda said in a joint statement that they disagreed with the decision.
He said, “In our view, the petition raises issues presented by new technologies and other innovations, and addressing these important issues is a core part of being a responsible regulator.”
© Thomson Reuters 2023