The U.S. Securities and Exchange Commission (SEC) has been ordered on Tuesday by the United States Court of Appeals for the Third Circuit to respond to cryptocurrency exchange Coinbase’s pending petition for rulemaking within seven days. 

See related article: Crypto industry reacts to SEC’s lawsuit against Binance

Fast facts

  • In April, Coinbase, the largest cryptocurrency exchange in the U.S., sued the SEC under the Administrative Procedure Act, seeking that the regulator be ordered by a court to publicly respond to its July 2022 petition asking for clearer crypto regulations. 
  • In its order on Tuesday, the court asked the SEC to clarify whether Coinbase’s rulemaking petition has been denied, and if not, then how much time would SEC require to decide whether to deny or grant that petition. 
  • “We continue to believe that rules of the road, from legislation or rulemaking or both, must come before enforcement actions. That is why we petitioned the SEC for rulemaking nearly a year ago in the first place,” Paul Grewal, the chief legal officer of Coinbase, said in a Tweet on Wednesday. 
  • “If the SEC’s answer to our petition for rulemaking is ‘no,’ then they are required by law to tell us, because we have the legal right to question that ‘no’ in court. And there are serious questions to be asked,” Grewal said. 
  • The SEC on Tuesday sued Coinbase for allegedly violating securities rules, a day after the regulator sued Binance, the world’s largest crypto exchange, on similar charges. Earlier in March, the SEC had issued a Wells notice to Coinbase and said it was considering legal action against the exchange over its staking services and other products. 
  • Regulators in the U.S. have been bearing down on crypto exchanges despite failing to set clear regulations for how the industry should operate. In February, the SEC fined U.S. crypto exchange Kraken and shut its crypto staking program. In April, the SEC charged Seattle-based crypto platform Bittrex with operating an unregistered exchange.
  • Coinbase shares on the Nasdaq rose as much as 2.19% during premarket trading on Wednesday. It dropped 12.09% at the close on Tuesday after a 9.05% fall on Monday. 
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