SEC Delays Response to Coinbase’s Petition; Enforcement Action Not Affected
On Tuesday, the U.S. Securities and Exchange Commission (SEC) revealed that it has yet to reach a decision regarding Coinbase’s (COIN) petition for rulemaking. The regulatory body clarified that its ongoing enforcement action against the cryptocurrency trading platform is independent of any ruling on the petition. This means that the SEC’s actions thus far are not in conflict with any potential decision related to Coinbase’s rulemaking request.
The SEC has provided a response to a court order, explaining its current approach to Coinbase’s rulemaking petition in relation to the ongoing enforcement action against the cryptocurrency platform. The regulatory body filed a lawsuit against Coinbase last Tuesday, accusing the company of operating without proper registration as a securities exchange, broker, and clearing agency. The SEC’s response addresses how it is considering the rulemaking petition in light of these allegations and the enforcement action it has taken against Coinbase.
Despite Coinbase’s claim that the SEC has already chosen to reject their petition, the SEC clarified on Tuesday that it has not reached a decision yet. However, the regulatory agency mentioned that its staff members anticipate making a recommendation within the next 120 days. This indicates that the SEC aims to provide their stance on Coinbase’s petition within the specified timeline.
The SEC emphasized that Coinbase must adhere to existing laws until the regulatory body proposes any new rules. The SEC’s ongoing enforcement action against Coinbase remains unaffected by the decision on whether to proceed with the rulemaking requested by the platform. In their filing, the SEC stated that regardless of the outcome of the rulemaking decision, Coinbase, like any other entity, is obligated to comply with the current laws. However, Coinbase retains the freedom to strongly assert its position that it has not violated these laws in the ongoing enforcement action.
Coinbase’s Chief Legal Officer, Paul Grewal, expressed his disagreement with the SEC’s approach in a tweet. Grewal stated that the SEC disregarded the Chair’s explicit statements, which indicated that there was no intention to introduce new rules. He argued that the SEC misinterpreted these statements as a definitive decision. On the other hand, the SEC maintained that the Chair’s statements cannot be considered as an official denial of Coinbase’s rulemaking petition. According to the regulatory agency, the Chair’s statements do not hold the power to constitute a formal action by the Commission.
1) they repeat the fallacy that they haven't made any decision on new crypto rules; 2) they refuse to commit to any deadline despite the Court's explicit order; 3) they instead "anticipate" making a "recommendation" in 120 days; and most importantly… 2/5
— paulgrewal.eth (@iampaulgrewal) June 13, 2023
The SEC contended that any decision made by the regulatory body would require a majority vote from a quorum. They emphasized that a quorum, which is the minimum number of members needed for official decision-making, is necessary for reaching a conclusive determination. This implies that the SEC highlights the importance of obtaining the support of the majority of its members before finalizing any decision.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
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