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Coinbase and the US Securities and Exchange Commission
renewed their legal tussle over the agency’s refusal to create specific rules
for the crypto space. This legal confrontation in a Philadelphia appeals court highlighted
the rift between the rapidly evolving crypto industry and US regulators.
Coinbase contended that the SEC’s current regulatory
framework is unsuitable for the crypto space, while the SEC maintained that its
existing rules are sufficient for the industry, Reuters reported.
Coinbase Pushes for New Crypto Rules
The crypto exchange initiated the lawsuit after the
SEC dismissed its 2022 petition for new rulemaking. The exchange argued that
the current lack of clear guidance creates significant operational challenges.
Eugene Scalia, Coinbase’s legal representative, reportedly
criticized the SEC for being arbitrary in denying clarity to the crypto
industry. He stated that the exchange has been left without a practical way to
comply with US laws, leading to significant operational uncertainty.
The SEC, however, sees things differently. It argued
that the regulator is not obligated to create new rules specifically for
crypto. According to the SEC, the existing regulatory framework should be
sufficient for digital assets.
This legal battle comes amid a broader fight between
the crypto industry and US regulators. The SEC has repeatedly insisted that
most crypto tokens should be treated as securities, thus falling under its
regulatory authority.
This has led to the agency filing lawsuits against various crypto firms, including Coinbase, accusing them of listing unregistered
securities. Coinbase denied these accusations and is engaged in a separate
legal case with the SEC regarding these allegations.
Future of Crypto Regulation
The federal appeals court judges noted that the SEC
has the discretion to prioritize its rulemaking but pressed the agency on why
cryptocurrency hasn’t been a higher priority, given its growing significance.
While the crypto industry seeks clarity, the SEC remains firm in its belief
that digital assets should be governed by the existing securities laws.
Interestingly, the SEC recently requested an additional four months to produce documents in the legal matter involving Coinbase. In a motion filed with the US District Court for the Southern District of New York, the regulator said that it required more time to review an extensive collection of 133,582 documents.
The regulator was reportedly scheduled to produce documents by October 18. However, it was argued that reviewing the extensive collection of documents required more time. This request, filed on September 18, aims to extend the deadline for fact discovery to February next year.
This article was written by Jared Kirui at www.financemagnates.com.
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