A US court has ordered the Securities and Exchange Commission to respond to Coinbase’s complaint about clarity on whether the securities regulator would allow the industry to be regulated using existing frameworks.
The latest development emerges amidst escalating tensions between the SEC and Coinbase, with the former ramping up enforcement actions and warnings against crypto firms, including the US crypto giant.
SEC’s 10-Day Deadline
Coinbase chief legal officer Paul Grewal took to Twitter to announce that the Third Circuit Court of Appeals issued a text-only order directing the SEC to file a response to the crypto exchange’s mandamus petition within ten days. The court also granted Coinbase the right to file a reply within seven days of the SEC’s response.
The original petition dates back to July 2022, when Coinbase asked if the SEC would propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods. The agency, however, refrained from offering specific public responses.
In the meantime, the SEC issued a Wells notice to Coinbase, signaling its intention to conduct enforcement actions against the exchange.
This prompted Coinbase to file a narrow action in federal court to compel the securities regulator to respond yes or no. In a federal court filing dated April 24, the company said it is “unreasonable for the SEC – an agency with over 4,500 employees – to take nine months (and counting) to complete that simple task.”
Grewal had previously commented,
“From the SEC’s public statements and enforcement activity in the crypto industry, it seems like the SEC has already made up its mind to deny our petition. But they haven’t told the public yet. So the action Coinbase filed today simply asks the court to ask the SEC to share its decision.”
Since January, the SEC has been aggressively targeting crypto platforms such as Bittrex, Gemini, and lender Genesis, as well as several individual actors accused of manipulating crypto assets, including Tron’s Justin Sun and disgraced Terraform Labs founder Do Kwon. As a result, many firms are now looking to move their operations to friendlier jurisdictions.
Amid the ongoing tribulations with the SEC, Coinbase launched a Bermuda-based marketplace for non-US institutional users. The San Francisco-based exchange will initially offer Bitcoin and Ethereum perpetual futures, with trades settled in the USDC stablecoin.
The announcement of the new venture follows regulatory approval from the Bermuda Monetary Authority (BMA).
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