Coinbase cites SEC action against Kraken in push for crypto rulemaking

The Nov. 22 letter claimed that „only mandamus will impel the [SEC] to fully, finally acknowledge that Coinbase’s petition for rulemaking was pocket-vetoed long ago.“

United States-based cryptocurrency exchange Coinbase has renewed its call to compel the Securities and Exchange Commission (SEC) to respond to the company’s petition to create rules on crypto, using the regulator’s recent enforcement action against Kraken to back up its claims.

In a Nov. 22 filing in the U.S. Court of Appeals for the Third Circuit, lawyers representing Coinbase filed a response to a Nov. 21 letter from the SEC saying it planned to provide a status report on the crypto rulemaking petition by Dec. 15. Coinbase filed its petition in July 2022, requesting the SEC “propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods,” with subsequent responses suggesting delays.

“[O]nly an order by this Court will make the Commission act,” said the letter. “Although the agency’s fear of a court ruling spurred it to do something, its proffer of another ‘report’ — as it continues to hedge and delay — confirms that only mandamus will impel the Commission to fully, finally acknowledge that Coinbase’s petition for rulemaking was pocket-vetoed long ago.”

We just filed a short response to yesterday’s SEC’s “update” on our petition for rulemaking. We are grateful for the Third Circuit’s attention to this matter. pic.twitter.com/TOFfn0wWYu

— paulgrewal.eth (@iampaulgrewal) November 22, 2023

Coinbase cited the SEC’s enforcement action against Kraken filed on Nov. 20, in which the commission alleged the crypto exchange commingled customer funds and failed to register as a securities exchange, broker, dealer, and clearing agency. The letter did not reference a Nov. 21 settlement of civil and criminal cases against major crypto exchange Binance, which did not include its ongoing case with the SEC.

“The Kraken action was necessarily approved by the Commission and […] is further evidence that the Commission sees no need for regulatory Clarity.”

The push for rulemaking came as reports suggest the SEC may be nearing a decision on a spot Bitcoin (BTC) exchange-traded fund for listing on U.S. markets. An approval would likely be one of the most significant positive trends toward mainstream crypto adoption.

Magazine: US enforcement agencies are turning up the heat on crypto-related crime