After suing Coinbase Exchange, America’s first publicly traded cryptocurrency trading platform, last week for violating securities law, the US Securities and Exchange Commission (SEC) has said it needs four months (120 days) to respond to the exchange’s rulemaking request on digital asset trading.
Per recent court documents, the commission claims that its delay in responding to the petition is unconnected to the exchange’s claims. Additionally, it said Coinbase is not entitled to mandamus imposing a deadline on the commission’s consideration of the rulemaking petition.
Meanwhile, the agency opines that Coinbase is bound by existing laws until legal requirements are changed adding that its enforcement of the existing laws does not indicate that it has decided not to pursue further regulations. Also, the agency noted that it is currently considering a number of other regulatory issues related to digital assets, including the classification of cryptocurrencies as securities.
Interestingly, the commission’s response is coming days after the United States Court of Appeals for the Third Circuit ordered the US SEC to respond to coinbase’s rulemaking petition within 7 days or explain why it should not.
In response to the Commission, Paul Grewal, Coinbase’s Chief Legal Officer in a tweet criticized the Commission for ignoring comments from SEC chair Gary Gensler.
4) they ignore the clear statements of the Chair that confirm they have no intent to issue new rules, and instead conflate the evidence of a decision those statements provide with an argument that the statements are themselves a decision. 3/5
— paulgrewal.eth (@iampaulgrewal) June 13, 2023
According to him, this is indicative of the commission’s lack of intent to issue new rules.
US SEC Extension Notification: Community Reaction
Also, the crypto community greeted the request for a four-month extension by the US SEC with mixed reactions.
While some have expressed frustration at the delay, arguing that regulatory clarity is essential for the growth and development of the industry, others have noted that the SEC’s request is not unusual and that it is important for the agency to take the time to carefully consider Coinbase’s request.
Undoubtedly, the need for clearer regulations and guidelines for the nascent industry cannot be underscored. If the SEC were to provide greater clarity and guidance on the regulatory status of cryptocurrencies, it could help elevate the industry and build investor confidence. However, if the SEC takes a hardline stance and seeks to regulate cryptocurrencies as securities, it could stifle innovation and hamper the growth of the industry.
