Circuit

Gary

Coinbase has filed a closing brief with the Third Circuit to oppose the SEC’s denial of its rulemaking petition. The heart of this issue is a single sentence in the SEC’s order that simply “disagreed” with Coinbase’s claim that SEC rules are impractical for crypto companies. Coinbase argues that this lack of reasoning alone should invalidate the SEC’s entire case. 
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The SEC cannot extend its jurisdiction over a new industry without Congress’s clear authorization and established rules. Remarkably, the SEC insists it doesn’t matter if the industry can comply with its rules, showing its intent to stifle the crypto industry without providing necessary regulations, said Coinbase. 
<h2 class="wp-block-heading" id="coinbase-believes-the-sec-wants-to-kill-the-crypto-industry">Coinbase Believes the SEC Wants to Kill the Crypto Industry</h2> 
Coinbase’s <a href="https://assets.ctfassets.net/sygt3q11s4a9/6epGNmHl71Xt2WPaRYKob3/b02e476a519c3c7f43c89dc8c24d2c8a/2024.05.31_-41-_Coinbase_Reply_Brief.pdf" rel="nofollow noopener" target="_blank">filing</a> calls for more than just vacating the order. It demands that the court order rulemaking. The SEC’s actions present a Catch-22 for crypto firms. It demands compliance based on an overly broad interpretation of its authority, engages in aggressive litigation against non-compliant firms, and refuses to create rules enabling said compliance. Coinbase’s chief legal officer, Paul Grewal, <a href="https://x.com/iampaulgrewal/status/1796524110023114817" rel="nofollow" target="_blank">commented</a> on the matter, stating: 
<figure class="wp-block-pullquote"> 
 <blockquote> 
 The SEC is bent on choking the digital asset industry and is refusing to provide the necessary rules the industry has requested to tighten the squeeze. We appreciate the Third Circuit’s careful consideration in this matter. Meanwhile, we’ll continue to push for clarity for the entire industry in every forum we can. 
 </blockquote> 
</figure> 
Also Read: <a href="https://www.cryptopolitan.com/global-market-react-coinbase-suffer-outage/">Global Markets React as Coinbase Suffers Major Outage</a> 
According to Coinbase, the SEC’s petition denial only confirms its intent to crush the industry. The brief shows the SEC’s readiness to adopt the most inconsistent and baseless legal positions to continue its oppressive campaign. Without a court order for immediate rulemaking, the SEC will continue its delay tactics, which are central to its strategy to weaken the industry. 
<h2 class="wp-block-heading" id="the-sec-says-it-doesn-t-have-to-ensure-compliance">The SEC Says It Doesn’t Have to Ensure Compliance</h2> 
The SEC’s brief lists four main reasons for disagreeing with Coinbase’s rule workability concerns. First, the agency claims it has no duty to ensure compliance with its rules. It sees its rules as tools to dismantle disfavored industries rather than to enable compliance with federal laws. 
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 <figure id="attachment_533806" aria-describedby="caption-attachment-533806" style="width: 100%" class="wp-caption alignnone">
 <img loading="lazy" decoding="async" class="wp-image-533806 size-full" src="https://www.cryptopolitan.com/wp-content/uploads/2024/05/image-344-1.jpg" alt="Coinbase Submits Closing Brief Opposing SEC’s Petition Denial" width="929" height="523" srcset="https://www.cryptopolitan.com/wp-content/uploads/2024/05/image-344-1.jpg 929w, https://www.cryptopolitan.com/wp-content/uploads/2024/05/image-344-1-300x169.jpg 300w, https://www.cryptopolitan.com/wp-content/uploads/2024/05/image-344-1-768x432.jpg 768w" sizes="(max-width: 929px) 100vw, 929px">
 <figcaption id="caption-attachment-533806" class="wp-caption-text">
 SEC Chairman Gary Gensler. Source: CNBC
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Second, the SEC says it doesn’t need to explain how its existing rules are workable, asserting that mere disagreement with Coinbase ends the discussion. Third, the SEC uses its numerous enforcement actions to prove workability despite those actions targeting firms for failing to comply with what Coinbase calls “unworkable rules.” 
Fourth, the SEC points to other rulemakings widely seen as attempts to further crush the industry as mitigating the exchange’s concerns, which are not solutions but additional burdens. The SEC’s reliance on vague “facts and circumstances” for applying securities laws to digital assets shows its intent to maintain broad, undefined jurisdiction without clear rules. 
This approach allows the SEC to exploit its power without articulating its legal stance through public rules and pre-enforcement judicial review. Only a court order for rulemaking will stop this arbitrary behavior, and Coinbase promises it will do everything in its power to achieve just that. 
Cryptopolitan reporting by Jai Hamid

Coinbase Submits Closing Brief Opposing SEC’s Petition Denial

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