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In its continued effort to force the Securities and Exchange Commission to make new rules for the cryptocurrency industry, Coinbase faced off with the regulator in federal court Monday.
Coinbase sued the SEC after its petition for rulemaking was denied. The case has now progressed to the US Court of Appeals for the Third Circuit.
Coinbase’s team told a three-judge panel on Monday that the SEC has failed to provide a path for actors in the digital asset space, despite frequently telling companies to just “come in and register.”
“[The SEC] refuses to provide a reasonable explanation for its barebones denial, yet it has wielded its purported authority to engage in an arbitrary enforcement campaign against our industry,” Paul Grewal, Coinbase’s chief legal officer, wrote on X following Monday’s hearing.
The SEC argued that just because Coinbase doesn’t like the rules does not make them above the law, nor is the SEC obligated to create a new framework.
“Rather than initiate new rulemaking, [SEC] Chair Gensler has repeatedly stated through speeches and testimony that the vast majority of digital tokens are securities, and has asked issuers and exchanges that offer, sell, and trade them to come in and register,” Grewal wrote in the 2022 petition.
The petition was denied because existing laws and regulations already apply to digital assets, Chair Gary Gensler said in December 2023.
Monday’s oral arguments come as Coinbase and the SEC continue a separate legal battle. The regulator in June 2023 sued Coinbase for allegedly operating as an unregistered broker, exchange and clearing agency.
The SEC claimed 13 cryptocurrencies available on Coinbase are securities: SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH and NEXO. The case is now in discovery.