Top crypto exchange Coinbase has filed a suit asking the securities and exchange commission (SEC) in the United States to answer questions on regulatory guidelines for the crypto industry. This comes after the SEC sent a Wells notice to the exchange threatening sanctions.
The lawsuit is seeking the court to compel the SEC to give a “yes or no” answer to a petition it submitted last July, seeking regulatory clarity for crypto. The petition earlier submitted demanded that the SEC comes up with clear-cut rules to guide the industry.
In a blog post earlier today, Coinbase’s chief legal officer Paul Grewal said there are more than 1,700 other entities supporting Coinbase’s position on regulations for the crypto space. Specifically, they are asking the SEC to reveal clearly how it decides which crypto token is a security and which is not.
“It’s important for the SEC and any other agency petitioned for rulemaking to respond to the petition once the agency has made up its mind, especially if the answer is no – otherwise the public can never exercise its right to ask a court if the agency’s decision was proper,” Grewal wrote.
The lawsuit is coming following the refusal of the SEC to obey the Administrative Procedure Act which requires the commission to respond to the exchange’s rulemaking petition “within a reasonable time.”
“If the SEC says no to our rulemaking petition, which it has the right to do, then Coinbase would be allowed to challenge that decision in court and explain in that formal setting why rulemaking is required,” he added.
The SEC’s Crackdown on Crypto
Regulators in the U.S, particularly the SEC has clamped down heavily on crypto companies in the U.S, making the environment hostile for crypto businesses. This is in spite of lack of regulations guiding the industry.
Up to this moment, the SEC led by Gary Gensler decides abitrarily what crypto token is a security and which is not, without providing any guidelines on how this is determined. To this end, Coinbase is seeking an answer since the commission is seeking to sanction it for no clear reasons.
Grewal further said “Regulatory clarity is overdue for our industry, yet Coinbase and other crypto companies are facing potential regulatory enforcement actions from the SEC, even though we have not been told how the SEC believes the law applies to our business.”
“The rulemaking process is a critical step to giving the public notice about what activities they can and cannot engage in. So until the crypto industry gets that clarity, we will continue to take every step available to us to seek it, which includes today’s filing,” he concluded.
Coinbase May Dump the U.S
The actions against crypto companies in the U.S with no rules has caused many of them to leave the country. Coinbase may not be left behind in this. The exchange’s CEO Brian Garlinghouse recently mentioned that the exchange was open to the idea of relocating from the U.S if the country did not reconsider its stance on crypto.
Bittrex, one of the olderst crypto exchanges in U.S also announced recently that it was moving out of the country, after which the SEC charged it with operating an unregistered securities trading platform. By Gensler’s definition, any crypto exchange that trades anything other than Bitcoin is a securities exchange and should be registered and regulated as such.