Coinbase scores partial win as court demands SEC to clarify crypto regulation
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- The US Court of Appeals for the Third Circuit affirmed that the SEC must explain why it denied Coinbase's petition.
- Coinbase petitioned the agency to clarify how securities laws apply to cryptocurrencies.
- The court added that it will not mandate the SEC to implement new rules for crypto assets.
In a statement on Monday, the US Court of Appeals for the Third Circuit mandated the Securities & Exchange Commission (SEC) to comply with Coinbase's petition regarding crypto regulations.
Coinbase secures court approval for SEC to clarify crypto regulations
The US Court of Appeals for the Third Circuit ordered the SEC to respond to Coinbase's petition concerning cryptocurrency regulations. The SEC had previously denied Coinbase's request, but the three-judge panel ruled that this denial was unreasonable.
"Because we believe the SEC's order was conclusory and insufficiently reasoned, and thus arbitrary and capricious, we grant Coinbase's petition in part and remand to the SEC for a more complete explanation," the court said in a statement.
Coinbase's case with the SEC began in July 2022 after the exchange petitioned the regulator to provide an adequate explanation regarding how securities laws apply to digital assets.
The petition also urged the agency to develop regulatory frameworks that fit into the world of digital assets, making it easier for companies to comply with federal laws.
"In the securities-law context, it is unremarkable that novel complex financial instruments may not always fit neatly within existing securities rules, especially if inherent attributes of those novel financial instruments may undermine the objectives of those rules," the court noted.
The exchange and the wider crypto community see the court's stance as a big win for the crypto industry.
However, the court also stated that it won't order the SEC to implement rulemaking proceedings at this stage.
Meanwhile, the Washington Post revealed in an article on Monday that the Trump transition team and entrepreneur David Sacks are working on a legislative strategy in collaboration with crypto industry leaders.
The article noted that Donald Trump is expected to sign executive orders on his first day in office. The order will allegedly tackle issues related to the de-banking of crypto companies and the repeal of Staff Accounting Bulletin 121 (SAB 121).
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