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Several crypto organizations and lobbying groups have thrown their weight behind Coinbase’s efforts to prompt the Securities and Exchange Commission (SEC) to establish clear regulations for the cryptocurrency industry. In amicus briefs filed on Monday in the Court of Appeals for the Third Circuit, these groups highlighted the SEC’s lack of clarity in regulating crypto and argued that existing securities laws are ill-suited for the digital asset landscape.
Among the proponents are the U.S. Chamber of Commerce and the Crypto Council for Innovation, who emphasized the necessity for the SEC to intervene and draft comprehensive rules tailored to the crypto sector. They voiced concerns that without regulatory clarity, more businesses might opt to relocate due to the uncertain regulatory environment in the United States.
This development stems from a protracted dispute between Coinbase and the SEC regarding the need for specific regulatory frameworks for crypto. Coinbase initially requested formal rulemaking from the SEC in July 2022 and subsequently sued the agency in April 2023 to compel a response to its petition. However, the SEC rejected the call for new rules, with Chair Gary Gensler asserting that existing regulations already encompass crypto activities. In response, Coinbase sought relief from the appeals court to compel the SEC to initiate rulemaking for the crypto industry.
Meanwhile, the SEC has been pursuing enforcement actions against numerous crypto firms, including Coinbase, for allegedly operating as unregistered exchanges.
In their amicus briefs, the Crypto Council for Innovation criticized the SEC’s enforcement approach as arbitrary and lacking stakeholder input. They highlighted the challenges faced by industry participants in deciphering the SEC’s stance based on public statements and judicial rulings.
Similarly, the U.S. Chamber of Commerce expressed concern over the economic repercussions of regulatory ambiguity on investors and the digital asset economy. They criticized the SEC’s reluctance to adapt regulations to accommodate the evolving crypto landscape.
Paradigm, a crypto investment firm, argued in its brief that the SEC’s traditional regulatory framework for securities is incompatible with crypto, given its decentralized nature. They highlighted the inadequacy of issuer-centric disclosures mandated by the SEC for crypto projects, emphasizing the decentralized nature of crypto networks.
Overall, these amicus briefs underscore the pressing need for regulatory clarity in the crypto space and advocate for the SEC to take proactive steps in drafting tailored rules for the industry.
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