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The SEC, the regulatory watchdog of the United States, finds itself at a crossroads, undecided on whether to entertain Coinbase's petition for rulemaking. The SEC has made it clear that its pending enforcement action against the popular cryptocurrency trading platform is separate and will not be influenced by the decision regarding the petition.
Last week, the SEC sued Coinbase, alleging that it has been acting as an unregistered securities exchange, broker, and clearing agency. The lawsuit emerged in response to a court mandate requiring the regulator to clarify its stance on Coinbase's rulemaking petition, which the SEC now insists is still under consideration. Despite Coinbase's claims that their petition has been disregarded, the SEC has declared that no decision has been finalized. SEC staff is anticipated to provide a recommendation within the next four months.
While the SEC deliberates on potential new regulations, Coinbase is expected to comply with existing laws. The regulatory body emphasized this expectation during discussions about its ongoing enforcement action against Coinbase. The SEC asserted that Coinbase retains the right to argue against any perceived legal violations in its current enforcement action.
In response to the SEC's stance, Paul Grewal, Coinbase's Chief Legal Officer, expressed his disappointment on social media. Grewal argued that the SEC had disregarded clear indicators from its Chair about the lack of intent to enact new rules. He claimed that the SEC was using these statements as evidence of a decision rather than recognizing them as the decision itself. However, the SEC countered this, maintaining that the Chair's statements did not, and could not, represent a formal Commission action denying Coinbase's rulemaking petition.
Despite the ongoing legal tensions, Coinbase is required to adhere to existing regulations until any new rules are proposed.
