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On May 4, Coinbase’s chief legal officer Paul Grewal announced that the United States Court of Appeals for the Third Circuit had responded to the complaint against the U.S. Securities and Exchange Commission (SEC) concerning the necessity for definitive regulations for trading digital assets. This represents a progression in the legal struggle for regulatory transparency.
Grewal noted that the court’s reply to their complaint against the SEC was a text-only order. The court has mandated that the SEC respond to Coinbase’s writ of mandamus within ten days. A writ of mandamus is a judicial order directed at a subordinate government official, instructing them to properly execute their official responsibilities.
The Third Circuit has just issued a text-only order instructing the SEC to submit a response to our mandamus petition within 10 days (and allowed us 7 days for a reply). Here’s the text of the order:
TEXT ONLY ORDER (Clerk) At the direction of the Court, Respondent is ordered to file an…— paulgrewal.eth (@iampaulgrewal) May 3, 2023
Grewal mentioned that the court had permitted Coinbase to submit a reply to the SEC’s response within seven days of its filing. He also conveyed gratitude for the court’s comprehensive review of the case.
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Coinbase, the largest cryptocurrency exchange based in the U.S., initiated a lawsuit in April seeking to compel the SEC to publicly clarify its position on a petition submitted several months earlier. In this petition, the exchange raised 50 specific inquiries regarding the regulatory classification of certain digital assets. The inquiries were extensive, addressing issues such as the classification of tokens as securities and requesting clarification on various other topics.
In spite of the absence of a public response to the petition, the SEC has intensified enforcement actions and issued warnings to cryptocurrency exchanges. The commission has previously sent a Wells notice to Coinbase. A Wells notice typically alerts a company that the SEC may pursue an enforcement action.
Related: Coinbase to halt issuing new Bitcoin-backed loans via Borrow service
In light of the ongoing regulatory challenges faced by the company, U.S. investment bank Citigroup has downgraded the shares of the crypto exchange from “buy” to “neutral” and has also reduced its price target. The bank cited “too many unknowns” as the rationale for this downgrade. According to Citi analyst Peter Christiansen, the downgrade will remain until the regulatory “rules of the road” are more clearly defined in the United States.
Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?
