The U.S. Securities and Exchange Commission (SEC) is still evaluating Coinbase’s petition for rulemaking. The regulator has not yet decided whether to grant the petition, and it has not responded to Coinbase’s request for a timeline.
A few minutes ago, the SEC filed its response to the last week’s Third Circuit. You can read it for yourself below together with my own initial read of it. 1/5
— paulgrewal.eth (@iampaulgrewal) June 13, 2023
The recent enforcement action taken against Coinbase by the regulator has raised concerns about its potential impact on the rulemaking process. Here are the key details:
- SEC’s Decision Status: No Response Yet
The SEC has clarified that it has not made a decision regarding Coinbase’s petition for rulemaking. The regulatory body has not confirmed whether it will respond to the petition or not, leaving Coinbase and the community eagerly awaiting further updates.
- Enforcement Action and Rulemaking Distinction
Despite the enforcement action taken against Coinbase for allegedly operating an unregistered securities exchange, broker, and clearing agency, the SEC asserts that this action does not conflict with any potential decision on rulemaking. The enforcement action and rulemaking process are separate matters that the SEC is considering independently.
- Anticipated Recommendation Timeline
SEC staff members have indicated that they expect to provide a recommendation regarding Coinbase’s petition within approximately four months (120 days). This timeline provides some insight into the potential progression of the rulemaking process.
- Adherence to Existing Laws
The SEC has emphasized that until new rules are proposed, Coinbase must comply with the current legal framework. The regulatory body reiterates that all market participants, including Coinbase, are obligated to abide by the existing laws and regulations governing the crypto industry.
- Coinbase’s Assertion of Compliance
Coinbase maintains its position that it has not violated any laws in the ongoing enforcement action. The company is free to assert its compliance and vigorously defend its stance while the SEC evaluates the petition for rulemaking.
Notably, Coinbase’s Chief Legal Officer, Paul Grewal, expressed dissatisfaction with the SEC’s response. He stated that the regulator ignored the Chair’s unambiguous statements that no new rules would be issued. Grewal believes that the SEC is misinterpreting the Chair’s words as a decision. However, the SEC claims that the Chair’s words do not constitute an official Commission action denying Coinbase’s rulemaking petition.
As the SEC continues to evaluate Coinbase’s petition, the decision-making process will require a majority vote from the Commission’s quorum. The outcome of this regulatory fight will undoubtedly have implications for both Coinbase and the broader crypto industry.
