The US Third Circuit Court of Appeals on Monday heard Coinbase’s arguments against the Securities and Exchange Commission’s (SEC) denial of its petition to propose new rules for cryptocurrency regulation.
According to a post on the X platform by journalist Eleanor Terrett, all was set for the courts to hear Coinbase’s arguments.
Coinbase reportedly claimed that the SEC acted “arbitrarily and capriciously” by denying the proposal to change the rules in December 2023, in what was one of the broader conflicts between the regulator and the digital asset industry.
Coinbase accuses SEC of making life difficult for crypto sector
The crypto exchange argued that the existing laws were inadequate to govern the booming crypto sector.
However, SEC chair Gary Gensler said then that: “Existing laws and regulations apply to the crypto securities markets.”
According to a Reuters report, the five-member commission vowed that it would not propose new rules as it disagreed that the then regulations were not workable for the cryptocurrency sector, as per Coinbase’s assertion.
The crypto exchange later revealed that it had filed a petition for another look at the SEC’s decision. Coinbase said the regulator’s decision was an “abuse of discretion.”
In their Monday submission, Coinbase requested the federal appeals court to reverse the SEC’s decision on grounds that the regulator had made it difficult for the crypto exchange to do business subsequently complying with the US regulations.
Earlier in 2022, Coinbase had pushed the SEC to come up with a bespoke set of rules for the cryptocurrency industry as the then-existing laws were not enough for the sector. The exchange continued pushing and appealed to a judge in April to compel the SEC to respond to their petition.
SEC’s decisions affect Coinbase and the entire industry
The ongoing fighting between Coinbase and the regulator has been argued to be the latest “broader tug-of-war” between the SEC and the digital assets industry in the US. SEC has argued several times that most cryptocurrency tokens are securities and therefore fall within its jurisdiction.
Because of this view, the SEC has filed against several crypto businesses including Coinbase for trading in crypto tokens, arguing these should be registered as securities.
Coinbase is reportedly denying the allegations and fighting them in a separate court case. The crypto exchange has also asked the SEC to give clarity on how and under what circumstances digit assets become securities.
While the crypto sector is growing the world over, it is largely believed to be shrouded in regulatory uncertainties. The sector is currently governed by existing securities laws.
