Coinbase vs. SEC: Court Mandates Timely Response on Regulatory Clarity
- Coinbase will have the opportunity to respond to SEC’s submission within seven days after SEC’s response.
- Coinbase will suspend its borrow program on May 10.
In a recent development, the Third Circuit court ordered the US Securities and Exchange Commission (SEC) to respond to Coinbase’s formal rulemaking petition on digital asset regulation within 10 days, according to chief legal officer Paul Grewal. The order comes as part of an ongoing legal dispute between the cryptocurrency exchange and the SEC over the regulation of digital assets.
Coinbase, one of the largest cryptocurrency exchanges in the world, had previously requested regulatory clarity on the rules governing digital assets, but the SEC failed to respond to their initial appeal. As a result, the exchange filed a second petition in federal court, seeking to force the SEC to respond and shed light on the potential implications of existing securities regulations for digital assets.
The Third Circuit’s ruling indicates that the court is attentive to Coinbase’s concerns and is willing to take action to ensure that the SEC provides clarity on its policies regarding digital assets. The SEC now has 10 days to formally address Coinbase’s concerns over the unclear state of the rules governing digital assets. Following the SEC’s response, Coinbase will have an opportunity to respond within seven days of the filing date.
Meanwhile, amid the regulatory pressure, Coinbase announced plans to discontinue its Borrow program, which allowed customers to borrow fiat loans up to $1 million against as much as 30% of their bitcoin holdings, with interest. Customers received an email on Wednesday notifying them that the last day to take out new loans would be May 10.
In an exclusive interview with Coindesk, a person familiar with the matter revealed that the closure of Coinbase Borrow was unrelated to any enforcement action and was not connected to the exchange’s ongoing legal dispute with the SEC.