Coinbase CLO slams SEC’s barebones response in rulemaking petition case

Coinbase CLO Paul Grewal criticized a minimalistic legal filing from the U.S. Securities and Exchange Commission (SEC) on Jan. 30.

Grewal wrote in a post on X:

“Below is the administrative record of [the SEC’s] decision rejecting our petition for digital assets rules. See for yourself whether it’s even close to complete or sufficient to justify their decision.”

Coinbase originally submitted a petition for rulemaking in June 2022. There, it requested that the SEC set out clearer rules for the crypto industry.

The SEC rejected the request on Dec. 15, 2023, disagreeing with Coinbase that the existing securities regulations around crypto are insufficient.

The SEC’s latest filing, dated Jan. 24, is a record of documents leading up to its December decision. The linked documents largely include comments from individuals outside of the SEC and notices of meetings between the SEC and Coinbase. Neither document type explains the SEC’s stance on the matter, and all are presented without further comment from the SEC in the current filing.

Only the SEC’s initial acknowledgement of the petition request and its final rejection letter (both of which are listed in the latest filing) arguably provide significant information about its stance on the matter.

Coinbase continues to push for review

Though the SEC rejected Coinbase’s rulemaking petition in December, Coinbase asked the court to review the request once again following that outcome.

Grewal described the timeline for upcoming legal proceedings in his X post today. He said that Coinbase’s brief is due on March 11, that the SEC’s brief is due on April 10, and that Coinbase’s response is due on May 1. He added that Coinbase “appreciate[s] the Third Circuit’s consideration.”

Coinbase’s request is significant because the SEC charged the company with securities violations in June 2023. Though the two cases are separate, Coinbase has referred to each in relation to the other. In March 2023, Coinbase anticipated the SEC’s charges and stated in a public blog post that it attempted to ask for clear rules through its rulemaking petition, but “got legal threats instead.”

It is unclear whether the outcome of the rulemaking petition will play any role in the securities violation case. However, clearer rules could reduce the likelihood of further SEC enforcement against Coinbase and other firms in the future.