SEC snubs Coinbase’s seven-day rulemaking request but could act by October

The U.S. Securities and Exchange Commission (SEC) stated in a June 13 court filing that it has not yet decided on requests from Coinbase.

SEC says it hasn’t decided on rulemaking

In July 2022, Coinbase petitioned the SEC to engage in rulemaking for the cryptocurrency industry, seeking clear regulatory guidelines. Later, in April 2023, Coinbase submitted a court filing requesting a writ of mandamus that would compel the SEC to act on their rulemaking petition.

On June 7, 2023, courts ordered the SEC to answer specific questions within seven days. This prompted the SEC’s latest letter, arguing that Coinbase’s “extraordinary” request for a writ of mandamus within seven days is without merit.

The SEC stated that it has not decided what action to take regarding Coinbase’s rulemaking petition, nor has it decided to deny it. The regulator also said there should be no specific deadline for any decision it might make. Furthermore, it said it should not be compelled to provide periodic reports, as requested by Coinbase.

The SEC mentioned that its staff “anticipate being able to make a recommendation” internally within 120 days, by October 11. The regulator also said it could provide a status report to the court at the end of that period.

The agency urged the court to dismiss Coinbase’s request for a writ of mandamus.

Coinbase’s Paul Grewal responds to agency

Coinbase CLO Paul Grewal responded by maintaining that statements from SEC Chair Gary Gensler show that the agency does not intend to issue new rules.

Grewal insisted that those statements are evidence of a decision, even if they are not a decision in their own right, and said that the SEC had conflated these ideas.

The SEC stated in its filing today that this is an “erroneous” contention by Coinbase. It said that Gensler’s statements (as well as its regular enforcement actions) are not an implicit decision to deny Coinbase’s rulemaking petition. The securities regulator insisted that it is considering Coinbase’s petition “in the ordinary course.”

Coinbase broadly asserts that it has been given no clear pathway to register with the SEC. This argument is part of Coinbase’s defense against a separate lawsuit filed by the SEC on June 6, alleging that Coinbase has violated securities regulations, including charges of offering certain cryptocurrency products and services without proper registration.

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