Coinbase in a letter to the Court of Appeals argued that the Securities and Exchange Commission (SEC) has been reluctant concerning the quest for new crypto rules. The exchange had in April sued the SEC demanding clear regulatory guidelines for the crypto industry.
Since then, the SEC hasn’t done anything about the suit, arguing that the crypto industry already has sufficient guidance and does not have any special guidance. The agency also argued that it would take too long to come up with a new regulatory framework for the industry.
In the letter, Coinbase lawyer Eugene Scalia said in the letter, “Only an order by this Court will make the Commission act,” adding that a recent update to the court from the SEC provided “no additional information about its progress” other than the promise of a further status report by Dec. 15.
“Although the agency’s fear of a court ruling spurred it to do something, its proffer of another ‘report’ — as it continues to hedge and delay — confirms that only mandamus will impel the Commission to fully, finally acknowledge that Coinbase’s petition for rulemaking was pocket-vetoed long ago,” Scalia continued.
Kraken Lawsuit Shows SEC’s Indifference
While Coinbase’ case subsists in the court, the SEC has moved on to sue another top exchange, Kraken, with similar charges to those of Coinbase and Binance which the agency sued in June.
Coinbase in its Wednesday letter told the court that the suit against Kraken was evidence that the SEC was not ready to bring any new rules to the crypto industry.
“The Commission’s submission comes just a day after filing another lawsuit against a crypto exchange,” Scalia wrote, saying the suit illustrated that “the SEC’s asserted need for more time to make up its mind is a mirage.”
“The Kraken action was necessarily approved by the Commission and (like previously commenced suits against Coinbase and others) is further evidence that the Commission sees no need for regulatory clarity,” he continued. “Its course is determined, and the Court should reject this latest empty gesture.”
The SEC has insisted that most cryptocurrencies are securities and that crypto exchanges are also security exchanges, which must be registered with the agency to operate legally. This is why is it charging Kraken with failing to register as a security exchange as well as engaging in practices that are unbecoming of a security exchange.
The Need for New Rules
There is a subsisting confusion concerning crypto regulation in the U.S, as top regulatory bodies the SEC and the commodities futures trading commission (CFTC) sustain different views on the matter.
While the SEC says crypto has sufficient guidance, CFTC chairman Rostin Behnam says that the industry needs a separate set of rules to guide it because cryptocurrencies are unique assets and cannot be brought under the same rules as traditional assets like bonds and stocks.
Based on this, lawmakers are already working on drafting a legal framework for the regulation of the industry that will create unique rules that fit the industry specifically. Such rules will enable the industry to have clear guidance and allow it to thrive, which is what Coinbase hopes for.