Coinbase Wins Court Round:- Coinbase has taken a step forward in its efforts to get the SEC to explain how it decides if a cryptocurrency should be classified as a security. However, the SEC still has ways to push back against Coinbase’s request.
A court told the SEC to explain why it took so long to respond to Coinbase’s request for rules on handling digital asset transactions. But the SEC may not comply quickly because it wants to control the cryptocurrency market, which is part of a wider government crackdown. The court’s decision doesn’t mean Coinbase will win, and the SEC probably won’t agree to participate in Coinbase’s proposal for rule-making.
The SEC
The SEC may argue that it needs more time to consider Coinbase’s request for rule-making and try to dismiss the case. However, Coinbase believes that the SEC is required by federal law to respond within a reasonable time.
Alternatively, the SEC could reject Coinbase’s request for a clear definition of the criteria for classifying a digital asset as a security. This could prompt Coinbase to take the SEC to court to argue that rules are necessary. Coinbase’s April 24 blog post stated that their petition to the Court of Appeals for the Third Circuit provides this opportunity since Delaware, where Coinbase is incorporated, is included in that circuit.
John Deaton
According to John Deaton, a legal expert on cryptocurrency, the SEC may also try to dismiss Coinbase’s petition by arguing that it has the discretion to take a reasonable amount of time to make a ruling, and that there is no evidence of abuse of that discretion. If the SEC takes this route, the case could be dismissed.
A representative from the SEC, who preferred to remain anonymous citing agency policy, declined to comment on the court’s order. Similarly, a spokesperson for Coinbase also had no further comment. John Deaton believes that the agency will provide a vague response given its recent ruling on hedge funds and private-equity firms, which did not include digital assets and stated that the SEC is still considering the term.
Coinbase’s
Coinbase’s uncertainty about regulations has led to the company expanding its operations outside the US. On Tuesday, the firm launched the Coinbase International Exchange, which offers bitcoin and ether perpetual futures for institutional clients outside the US. Coinbase will release its Q1 earnings report today after the market closes. As of Thursday morning, the company’s shares were trading at $49.20, up 1.5% for the session.
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