Coinbase filed a petition for rulemaking with the SEC in 2017 requesting clarification on the conditions under which a digital asset is a security and the creation of a new market structure framework that is compatible with cryptocurrencies.
Coinbase Global Inc filed a petition on Monday to compel the U.S. Securities and Exchange Commission to establish new rules for digital assets, the company announced in a blog post, marking the latest escalation of tensions between the cryptocurrency exchange and the securities regulator.
Coinbase filed a petition for rulemaking with the SEC in 2017 requesting clarification on the conditions under which a digital asset is a security and the creation of a new market structure framework that is compatible with cryptocurrencies.
Paul Grewal, Coinbase’s chief legal officer, stated in a blog post that the SEC has not publicly responded to the petition, prompting Coinbase’s legal challenge.
“Coinbase and other crypto companies face potential regulatory enforcement actions from the SEC,” said Grewal. “However, the SEC has not indicated how it believes the law applies to our business.”
The petition will be lodged with the Third Circuit Court of Appeals.
The cryptocurrency industry is largely of the opinion that it operates in a regulatory gray area ungoverned by existing U.S. securities laws, and that new legislation is required to regulate the sector.
Gary Gensler, chairman of the Securities and Exchange Commission, has stated that cryptocurrency firms must comply with existing laws and that new crypto-specific regulations are unnecessary.
Coinbase disclosed in March that SEC staff had informed the company of their intent to recommend enforcement action. The company stated in a blog post at the time that it was prepared to defend itself in court against any imminent enforcement action.
In July, when Coinbase also submitted its rulemaking petition, the company disclosed an SEC investigation into its asset listing processes, staking programs, and yield-producing products.