Coinbase scored an early victory in its campaign to explain to the US Securities and Exchange Commission how it determines whether cryptocurrencies should be considered securities.
A federal appeals court gave the agency 10 days to explain why it challenged rules governing digital asset transactions at a major U.S. cryptocurrency exchange in July, the agency's chief counsel said. That's why we don't follow the SEC's rapid-fire authorization, so we're asserting our authority over the cryptocurrency march through a series of measures similar to Anne Grace's large-scale government pressure.
"It's not surprising that 3rdService moved so quickly and it's not a sign that Coinbase is going to win," said Virginia Securities Attorney James Murphy. The Securities and Exchange Commission (SEC) is likely to agree to participate in Coinbase's proposed rulemaking process.
Even if the agency does not respond to the reason within the time limit set by the court, it can reject the application. "The SEC may argue that it is acting within its mandate to continue reviewing Coinbase's regulatory application for a period of time because there is no specific time frame," he said. Coinbase argues that federal law requires the SEC to respond "within a reasonable time" to Coinbase's regulatory inquiry.
Instead, the agency could have simply said no, rejecting the exchange's initial request to specify the exact criteria for determining digital assets as securities, Murphy said. However, the strategy allows Coinbase to go to court with the SEC and argue that the rules are necessary, the company said in a blog post published on April 24 as part of the exchange's petition to the 3rd Circuit Court of Appeals. This includes Delaware, where Coinbase is incorporated.
According to John Deaton, founder of the Deaton law firm, the SEC may file a motion to dismiss Coinbase's petition in federal court, saying the agency has full discretion to make a decision "within a reasonable period of time." Crypto Law Legal News Site. He added, "They say there is no evidence of abuse of their ideology, so it should be rejected."
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An SEC spokeswoman, who declined to be named, citing agency policy, declined to comment on the matter. Grewal's tweet said Coinbase would have seven days to respond to any proposed SEC response; A spokesman for the exchange, who asked not to be named, said he would not comment further.
The agency could keep its response as vague as possible, Deaton added, citing a footnote in another SEC decision Thursday on reporting guidelines for hedge funds and private equity firms. In the new iteration, the SEC removed digital assets and said, "The committee and staff will continue to review this term and do not currently adopt ``digital assets'' in this rule."
Regulatory uncertainty prompted the company to begin looking for jobs outside the United States. On Tuesday, Bermuda-based global exchange Coinbase launched a crypto exchange offering bitcoin and perpetual futures contracts to institutional clients outside the United States.
Coinbase is expected to report results for the first quarter of the year after the market closes today. Shares of the company were trading at $49.20 Thursday morning, up 1.5% for the session.