A three-judge panel from the US Court of Appeals for the Third Circuit has demanded the SEC explain why it didn’t respond to Coinbase’s requests for clear regulations
A recent ruling by the panel has called the US Securities and Exchange Commission’s (SEC) actions “arbitrary and capricious”
The US Court of Appeals for the Third Circuit has ordered that the SEC explain itself for refusing to set clear crypto regulations when Coinbase requested they do so after the regulator issued the exchange with a Wells Notice in March 2023.
According to one of the judges, “Rather than force the agency to make a rule, we order it to explain its decision not to.” Another cautioned the SEC against rendering a poor explanation like it has been doing.
The SEC vs. Coinbase
The SEC’s case against Coinbase began in March 2023 when it issued the exchange with a Wells Notice for violating securities regulation through its staking services and asset listings.
Coinbase responded with confidence in the legality of its operations and attempted to engage with the regulator to clarify the basis of its Wells Notice and set clear regulations.
The SEC, however, maintained that current securities regulations were sufficient to regulate crypto and filed a lawsuit in June 2023.
Recent developments
Coinbase won against the regulator following a ruling to freeze the case on the grounds of novelty as various courts across the country are reaching different conclusions on crypto being securities.
The SEC’s case will now go to an appeals court where it will be decided whether it should be tried in a district court.
This new development from the panel from the US Court of Appeals for the Third Circuit deals another blow to the SEC one week to the end of Gary Gensler’s term as SEC Chair.
Meanwhile, Coinbase Legal Head, Paul Grewal, counts this as a victory for Coinbase as noted by a post on X:
We just won our petition for a writ of mandamus at the Third Circuit. Rebuking @SECGov for its order denying our rulemaking petition, the Court held that the “SEC’s order was conclusory and insufficiently reasoned, and thus arbitrary and capricious, we grant Coinbase’s petition…
— paulgrewal.eth (@iampaulgrewal) January 13, 2025
