The US Securities and Exchange Commission rejected a petition filed by Coinbase Global on Friday, refusing the request for new regulations in the digital asset sector. The country’s leading cryptocurrency exchange expressed its intention to contest this decision in court.
The commission, comprising five members, voted 3-2 against proposing fresh regulations, citing a fundamental disagreement with Coinbase’s assertion that current regulatory frameworks are “unworkable” for the crypto industry. Following this denial, Coinbase informed an appeals court of its intent to pursue judicial review of the SEC’s ruling.
The dispute was the latest in a broader tug-of-war between the crypto sector and the top U.S. 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, for listing and trading crypto tokens which it says should be registered as securities.
“Existing laws and regulations apply to the crypto securities markets,” SEC Chair Gary Gensler said in a separate statement supporting the decision.
Coinbase disputed that assertion.
“No one looking fairly at our industry thinks the law is clear or that there isn’t more work to do,” chief legal officer Paul Grewal said in a statement. “We should be working together to create laws and rules that will benefit consumers and US 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 pressed the SEC to create a bespoke set of rules for the crypto sector, arguing that existing U.S. securities laws are inadequate. In April, Coinbase appealed to a judge to force the SEC to respond to the petition.
The court declined to mandate immediate action from the agency, citing the Securities and Exchange Commission’s commitment to providing a response to Coinbase’s petition.
Within the cryptocurrency sphere, companies have expressed the need for clearer guidelines from the SEC concerning the classification of digital assets as securities.
In his statement released on Friday, Gensler emphasized that Coinbase’s request for the SEC to establish regulations implicitly acknowledged the SEC’s jurisdiction over the cryptocurrency sector. This stance contrasts with Coinbase’s previous disavowal of the SEC’s authority.
Republican SEC Commissioners Hester Peirce and Mark Uyeda issued a joint statement expressing their disagreement with the commission’s decision.
They conveyed, “From our perspective, the Petition highlights critical matters arising from emerging technologies and innovations, underscoring the pivotal role of a conscientious regulator in resolving these significant issues.”