Coinbase formally lodged a legal challenge against the denial of its rulemaking petition with the US Securities and Exchange Commission in 2022.
According to Grewal, the ruling was “arbitrary and capricious.” Coinbase said that the SEC’s rejection constitutes an “abuse of discretion and contrary to law, in violation of the Administrative Procedure Act” in its request for review.
Coinbase said that the Commission’s policy of not creating rules violates the American Patent Association’s (APA) and the basic values of fairness that it represents since it persists in enforcing regulations against Coinbase and others outside its statutory jurisdiction.
According to Coinbase’s July 2022 petition, “crypto assets that are not securities need the certainty of being outside those rules,” and the cryptocurrency industry needs an “updated rulebook” to direct enterprises.
Coinbase proceeded to seek a writ of mandamus with the Third Circuit after the exchange’s receipt of a Wells Notice and the SEC’s failure to reply to the petition. In the same docket, Coinbase also submitted its petition for review.
Coinbase asked the SEC for regulatory clarification twice earlier this year, but the agency turned down both requests.
Coinbase is also the subject of active litigation by the SEC. They say the business offered and sold securities that weren’t registered with the government while acting as an unlicensed exchange. And it went after its own product as well. On Friday, SEC Chair Gary Gensler confirmed the denial of Coinbase’s rulemaking petition.
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