A three-judge panel of the U.S. Court of Appeals for the Third Circuit asked the SEC to explain why it did not respond to Coinbase’s request for clearer regulations. A recent ruling by the commission called the SEC’s actions “arbitrary and capricious.”
The U.S. Court of Appeals for the Third Circuit ruled on Monday over Coinbase’s refusal to seek clarity on its cryptocurrency regulations after regulators issued a Wells Notice to the exchange in March 2023. We asked the SEC for an explanation.
According to one of the judges, “we do not force the authorities to make rules, but we order them to explain their decision not to make them.” Another warned against the SEC’s lack of explanations.
SEC vs Coinbase
The SEC’s case against Coinbase began in March 2023, when Coinbase issued a Wells Notice for violating securities regulations through its staking service and asset listing.
Confident in the legality of its operations, Coinbase sought to work with regulators to clarify the basis of the Wells Notice and set clear regulations.
However, the SEC filed a lawsuit in June 2023, arguing that current securities regulations are sufficient to regulate cryptocurrencies.
recent trends
While various courts across the country have reached different conclusions on whether cryptocurrencies are securities, Coinbase has won a victory against regulators after a ruling freezing the case on novelty grounds.
The SEC’s case will now go to the Court of Appeals, which will decide whether it should be heard in district court.
This new development by a panel of the U.S. Court of Appeals for the Third Circuit deals another blow to the SEC, which is one week away from the end of Gary Gensler’s term as SEC chairman.
Meanwhile, Coinbase’s head of legal affairs, Paul Grewal, sees this as a victory for Coinbase.
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