SEC Will Continue Using Enforcement Actions As A Substitute For Rulemaking

• The U.S. Securities and Exchange Commission has responded to the mandamus petition filed by Coinbase.&
• The regulator has indicated that it will continue initiating enforcement actions in the absence of clear crypto regulations.&
• The SEC has advised the crypto industry to not regard Chair Gary Gensler’s public statements as formal guidance for regulation.&

The U.S. Securities and Exchange Commission has responded to the petition for writ of mandamus filed by American crypto giant Coinbase last month. The petition was filed to compel the SEC to provide a yes or no answer to a previous request from Coinbase which urged the securities regulator to use its rulemaking process to provide guidance for the crypto industry. 

SEC: Gary Gensler’s Public Statements Don’t Reflect Commission’s Stance

Paul Grewal, the Chief Legal Officer of Coinbase, took to Twitter earlier today to share the latest development in the intensifying legal battle between the crypto exchange and the SEC. Grewal revealed that the regulator’s response to its request for rulemaking for the crypto industry was a “resounding maybe.”. The SEC’s filing marked the first time it had formally explained its views on crypto regulation before the court. 

In the response filed with the U.S. Court of Appeals for the Third Circuit, the SEC urged the court to deny Coinbase’s mandamus petition, claiming that it was “baseless”. The securities regulator also called out the exchange for seeking the court’s help to compel it to act on the recently filed petition, citing that there were no statutes or regulations which required the Commission to act according to a specific timeline. 

That Coinbase would like its policy preferences addressed immediately does not entitle it to extraordinary relief ordering the Commission to act on a rulemaking petition that has been pending for well under a year.”

Securities and Exchange Commission

According to Paul Grewal, the SEC has acknowledged that it will continue to use enforcement actions as a substitute for rulemaking for the foreseeable future. However, the SEC has clarified that the information gathered from such enforcement actions could inform the Commission’s consideration of its regulatory approach for crypto assets. The SEC also advised the public to not consider public comments made by Chairman Gary Gensler as formal guidance or policy statements for the crypto industry.

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