As a reminder, cryptocurrency exchange Coinbase has been active not only in the courts with regulators, but also in the context of expanding its own operations. This week, the company announced the launch of an international trading platform called Coinbase International Exchange in Bermuda.

Because the exchange operates out of US jurisdiction, it will also support cryptocurrency derivatives. Initially, there will be perpetual Bitcoin and Etherium futures with 5x leverage, the company says. Once the platform is launched, the number of instruments will expand.

What’s going on in Coinbase’s court case against the SEC

According to Cointelegraph’s sources, the court’s response to Coinbase’s complaint against the SEC is a textual order or so-called mandamus, popular in countries of the Anglo-Saxon legal family. Generally, a mandamus is a court order against a lower-level government official that directs him or her to properly perform his or her official duties.

Recall that the escalation in the standoff between the exchange and the regulator began a few weeks ago when the SEC sent Coinbase a so-called Wells notice. It is a notice of the end of the investigation and the likely filing of a lawsuit. The regulator’s main claim is that Coinbase is distributing unregistered securities, which in this case is allegedly represented by the company’s steaming platform.

And it's a rather strange decision on the part of the Commission. The fact is that the regulator was inspecting Coinbase's business in early 2021 - just before the cryptocurrency's IPO. So the company's staking platform didn't raise any questions to the SEC at the time, but it didn't do so until two years later. In such a case, the regulator could be accused of improperly performing its own duties, which is quite similar to the truth.

Coinbase filed a lawsuit against the SEC in April and demanded that the court force the Commission to publicly disclose its position on a petition filed in the summer of 2022. In the petition, the exchange asked fifty specific questions about the regulatory treatment of certain digital assets. The questions were wide-ranging and covered the topic of classifying tokens as securities, as well as seeking clarification on various other issues. The regulator’s officials now have ten days to provide a legal explanation for their actions.

Unfortunately, so far there has been no move from the Commission to compromise on the regulation of the crypto industry. The regulator continues to pursue a policy of forcing companies to comply with its orders. So here it is quite possible that Coinbase’s court case against the SEC could turn the tide.

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What’s particularly odd is that the Commission has openly refused to define the term “digital assets” – and yet this is a key step in developing proper regulation of the industry. In midweek, the SEC published amendments to Form PF, the document that funds registered with the Commission fill out to disclose basic information about their business so that regulators can assess potential “systemic risks”.

As a reminder, the Commission regulates the cryptocurrency niche under the Securities Act of 1933. Naturally, this outdated document is hardly suitable for engaging with the cutting-edge blockchain and decentralised asset industry. However, judging by the behaviour of the agency's staff, they are not embarrassed by it, well, they don't want to move forward.

The SEC originally included a definition of digital assets in the August 2022 document. Had it come into force, it would have been the first time the Commission had given a precise definition of these investment instruments. However, regulator officials have now said that the Commission is not going to add a definition – at least for the time being. Here is the relevant rejoinder to that.

We have proposed adding ‘digital assets’ as a new term in the Glossary of Form PF. The Commission and staff continue to review the term and do not accept “digital assets” as part of the rule at this time.

The definition proposed by the Commission for digital assets is an asset “that is issued and/or transferred using distributed ledger or blockchain technology”. It includes other common terms like ‘virtual currencies’, ‘coins’ and ‘tokens’.

Overall, the SEC’s leadership continues to demonstrate a lack of competence regarding the crypto industry. The regulator’s actions are aimed at sabotaging financial innovation in the US, forcing local companies in the field to relocate their businesses to other countries. It is likely that the United States may well lose its leadership in cryptocurrencies and advanced finance for the foreseeable future.


We believe this decision will benefit the cryptocurrency industry in the US. Firstly, it will oblige the US Securities and Exchange Commission to explain its actions and respond to Coinbase representatives, which will help the overall coin regulation situation. Secondly, what is happening shows that even government agencies can be wrong in their position. And therefore their position not only can, but should be challenged.