Coinbase, the largest cryptocurrency exchange in the U.S., sued the Securities and Exchange Commission (SEC) on Monday, asking that the regulator be required by a court to publicly respond to its July 2022 petition asking for clearer crypto regulation guidelines. 

See related story: SEC’s Gary Gensler dodges question on whether Ethereum is a security

Fast facts

  • Coinbase filed the action under the Administrative Procedure Act, which requires the SEC to respond to Coinbase’s July 2022 petition within a reasonable time. 
  • Coinbase’s July 2022 petition asked that the SEC propose and adopt clearer regulatory guidelines for the cryptocurrency industry in the U.S. through its formal rulemaking process. Over 1,700 entities and individuals have submitted comments on Coinbase’s petition, echoing the request for regulatory clarity, according to Coinbase
  • Coinbase Chief Legal Officer Paul Grewal wrote in a blog post that Coinbase is not asking the court to tell the SEC how to respond. “We are simply requesting that the Court order the SEC to respond at all, which they are legally obligated to do,” he said.
  • The SEC did not offer a specific public response to Coinbase’s petition last year, according to Coinbase. However, in recent months, the SEC has increased its enforcement actions and warnings against cryptocurrency exchanges, including Bittrex, Gemini, and Coinbase itself. 
  • Coinbase asked the SEC in the filing to formally clarify “which digital assets must be registered as securities or how the registration and other requirements designed decades ago for traditional securities apply to digital assets.”
  • Coinbase’s lawsuit against the SEC comes just over a month after the exchange received a Wells notice from the SEC, warning that it expected to sue the exchange over allegations of violating U.S. securities law.
  • During a congressional hearing last month, SEC chair Gensler said “regulations actually already exist” for crypto to be managed effectively under securities laws. 

See related story: SEC warns Coinbase of potential legal action over staking, separately targets Tron founder Sun