Coinbase and US SEC Clash Over Crypto Regulation in Federal Court Appearance
Coinbase, the largest cryptocurrency exchange in the United States, clashed with the US Securities and Exchange Commission (SEC) over the lack of a clear regulatory framework for crypto assets. The legal battle intensified on September 23 when both parties appeared in a federal appeal court in Philadelphia, continuing their long-standing dispute over how digital assets should be regulated.
Coinbase has repeatedly called for more transparent and reasonable regulations, arguing that the SEC’s current framework is unworkable for the rapidly evolving crypto industry. This conflict dates back to December when Coinbase filed a petition criticizing the SEC’s lack of guidance, which the agency denied. The crypto exchange doubled down on its stance during the court hearing, stating that the SEC’s approach prevents crypto companies from operating effectively within the United States.
Courtroom Showdown
During the federal court hearing, Coinbase’s legal counsel, Eugenia Scalia, argued that the SEC has consistently failed to provide clear information on how crypto companies can register with the agency and comply with existing US laws. This lack of transparency, she claimed, makes it nearly impossible for crypto businesses to function under US jurisdiction.
In response, Ezekiel Hill, representing the SEC, argued that Coinbase should not expect the regulator to create a new set of rules specifically tailored for its business model. Hill stated that if Coinbase does not wish to comply with the current regulatory framework, it is not the SEC’s responsibility to accommodate the company’s operational preferences.
The presiding judges questioned why cryptocurrency was not yet included in the SEC’s regulatory plans, highlighting the agency’s cautious approach to developing rules for this emerging asset class.
Ongoing Legal Battle
The legal dispute between Coinbase and the SEC has been ongoing for some time. Last year, the SEC filed a lawsuit against Coinbase, accusing the company of failing to register as a broker while offering services in the US. Additionally, the SEC raised concerns over Coinbase’s staking program and claimed that several digital assets listed on the platform were unregistered securities.
In a separate incident, Coinbase filed a lawsuit against the Federal Deposit Insurance Corporation (FDIC) three weeks later, seeking information under the Freedom of Information Act, further escalating tensions between the exchange and US regulators.
What You Need to Know
Coinbase, founded by Brian Armstrong, is the leading cryptocurrency exchange in the United States and a significant player in the global market. Its ongoing legal battle with the SEC is part of a broader debate over how cryptocurrencies should be regulated in the country. Under SEC Chair Gary Gensler, the agency has taken a stricter stance on crypto, drawing criticism from industry players and even political figures like former President Donald Trump, who vowed to fire Gensler if re-elected.
As the legal tussle between Coinbase and the SEC continues, the outcome of this case could have far-reaching implications for the future of cryptocurrency regulation in the United States.