SEC Tells Coinbase it’s not subject to a deadline to provide clarity on crypto

On May 27, 2023

Coinbase filed a Petition for a Writ of Mandamus to have a court force the SEC to act on Coinbase’s July 2022 rulemaking petition
SEC responds that it’s not subject to a deadline and will continue enforcement actions

It’s been over 10 months since Coinbase filed a petition with the SEC to create new rules for digital assets and provide regulatory clarity for the crypto industry. In April, Coinbase filed a Writ of Mandamus to have a court force the SEC to respond.

On Monday, the SEC responded arguing that they are not subject to a specific deadline for responding to a petition like Coinbase’s rulemaking petition. In other words, the SEC is going to take it’s time unless forced by a court or a leadership change.

The SEC further said that it would continue enforcement actions. So the problem gets worse as the SEC won’t provide clarity to the crypto industry but will continue to take action against the crypto industry.

The SEC further argues that Coinbase cannot persuasively claim harm from the lack of clarity. Yet, there’s already talk about companies leaving the US and innovation going to other countries.

Here’s why this matters: From a business standpoint, businesses can take actions with certainty whether there is a good law or a bad law. But with an uncertain area of law or as in this case, no law/rules with the SEC refusing to provide clarity, there’s no clarity for business people to know what to do. This can then cause businesses to leave the US.

Coinbase argued that the SEC has secretly decided to deny the petition but is refusing to say so to avoid judicial review. The SEC denies this, yet crypto currency has been around over 14 years and the SEC still has not provided clarity or rules.

On top of all of that, the SEC even went to so far as to cite cases involving US other government agencies where periods of multiple years were not found unreasonable. Specifically, the SEC cited cases where a delay of more than nine years was not unreasonable, that delays of two and five years did not warrant mandamus, and other cases. Delays this long would be extreme given the speed of modern technology advancement and the crypto world.