Coinbase files lawsuit against SEC

Coinbase files a lawsuit with the SEC as the conflict between the US crypto industry and US authorities escalates. The agency, led by Gary Gensler, is increasingly conducting enforcement actions. The largest crypto exchange in the USA is finally demanding regulatory clarity and wants to save the industry.

Coinbase: Lawsuit against SEC to save crypto industry

In July 2022, the SEC issued a warning to Coinbase. The largest crypto exchange in the USA is said to be illegally selling nine different digital currencies. These are unregistered securities.

Coinbase responds to the warning with a demand . The SEC should provide a comprehensive set of rules for the crypto industry. In addition, 50 questions will be answered in order to provide the industry with clear answers that are so urgently needed to achieve legally compliant business activities.

Specifically, questions are to be answered that reveal which cryptocurrencies fall into which category – securities or commodities. In other respects, too, one expects clear guidelines from the authority – for example how a crypto exchange has to keep the deposits of its customers.

So far, the US regulator has not responded to this request. That’s why Coinbase is now filing a lawsuit against the SEC, as General Counsel Paul Grewal explains in a blog post .

Coinbase wants to save the US crypto industry thanks to this lawsuit. Managing director Brian Armstrong recently drew attention to his concerns that an exodus from the USA could follow. The company would thus join a number of crypto companies that have turned their backs on the US over the past few months.

There is currently no functioning market for digital asset securities in the United States due to the lack of a clear and workable set of rules. New rules facilitating the use of tokenized securities would allow for more efficient and effective capital allocation in financial markets.

SEC boss Gensler remains recalcitrant

Whether Coinbase can achieve its goal through legal channels remains questionable for the time being. According to US law, the request made in July 2022 must be answered in a “reasonable time frame”.

Coinbase could force the SEC to provide concrete answers through further lawsuits. However, the authority may not react in the desired way. You could also reject the company’s claim in general.

SEC chief Gary Gensler recently addressed the US Congress . There he should explain his policy towards the crypto industry. Republican politicians took a heavy hit on the Democrat on the Treasury Committee.

Gensler explained there that no new laws and no new regulations were required. Regulations already in force would only have to be applied, he explained. This comment raised questions in the finance committee. The crypto industry and other politicians cannot see any legal clarity.

After Gensler and the SEC were the last to take the initiative, the tide now appears to be turning. The US regulator is increasingly encountering resistance. Several lawyers also stated that the SEC does not have the necessary powers to put the crypto industry under the desired supervision.

More on the topic: Gary Gensler soon no longer a threat? 

Following an order by US President Joe Biden, a comprehensive crypto law is currently in the works in the US. A final version is not yet known. It could possibly set things straight.

Until then, further conflicts can be expected. Coinbase itself could be increasingly targeted by the SEC. In February, they already attacked a staking service provider and a stablecoin publisher. Coinbase operates itself in both fields. The SEC warned the crypto exchange last month.