SEC says Coinbase hasn’t proven the need for new framework

The Securities and Exchange Commission (SEC) on Monday turned to an appeals court, claiming Coinbase has failed to prove that the regulator needs to establish new rules for the digital assets sector. Coinbase had filed a challenge lawsuit seeking to force SEC to respond to the 2022 rulemaking petition.

The regulator asked the court to dismiss Coinbase’s challenge to force the agency to establish additional rules for the cryptocurrency sector. Regarding the original petition filed by Coinbase in July 2022, the regulator said it continues to review it.

Related: Coinbase challenges SEC to respond to rulemaking petition

The regulator added that Coinbase misstepped when it filed a challenge with the court, expecting SEC to respond in less than a year, while SEC usually takes 5 to 10 years to respond to such petitions in other areas:

As Coinbase’s own submissions make clear, considering the various paths it suggests is a necessarily complicated endeavor. Yet Coinbase filed its rulemaking petition fewer than ten months ago, supplemented aspects of the petition fewer than three months ago, and sought to supplement the record again only weeks ago.

SEC also said that thinking about new rules or changes to current regulations doesn’t mean that it won’t continue to enforce the rules that already exist:

Coinbase attempts an end run around the clear precedent foreclosing relief in these circumstances by arguing that all the Commission needs to do is memorialize its denial of Coinbase’s petition – a decision Coinbase incorrectly asserts has already been made. But it is undisputed that there has not been any final agency action on its petition, and Coinbase’s argument is largely premised on the erroneous view that recent Commission enforcement actions indicate a Commission decision not to engage in rulemaking.