As a reminder, Coinbase has filed a lawsuit against the US Securities and Exchange Commission. In it, it asked not only for a new framework for regulating cryptocurrencies, but also to answer 50 clear questions that would help provide clarity in the area of digital asset management.

In the end, the court ordered the SEC to respond to the petition, which was filed back in the summer of 2022. In addition, the crypto-exchange received support from the US Chamber of Commerce.

However, as it has now become clear, even a court ruling will not make the Commission officials itch.

The challenges of regulating cryptocurrencies in the US

US Securities and Exchange Commission officials have said that the Commission is not obliged to comply with Coinbase’s demands in the relevant petition. The company is allegedly demanding a complex set of reforms and rulemaking in an unreasonably short timeframe. Here’s the relevant rejoinder from the agency’s staff, cited by Cointelegraph.

Neither the Securities Act nor the Administrative Procedure Act imposes an obligation on the Securities and Exchange Commission to issue the new rules on “digital assets” that Coinbase has requested.


And it's a rather odd position that really hurts everyone in the industry. After all, businesses don't get a clear list of rules that, at a minimum, will allow them to avoid heavy fines and problems with regulators. And the U.S. economy in this case will have a minus for the budget, as companies will be eager to leave jurisdictions with such uncertainty in regulation.

It is also a mystery why the Commission did not regulate earlier, since the Bitcoin network has been in operation since as far back as 2009. Apparently, regulators are more comfortable using the Securities Act of 1933, although cryptocurrencies don't fit into its framework either.


In addition, the SEC insists that the court should dismiss Coinbase’s complaint in its entirety, called mandamus. In the Anglo-Saxon legal family, it is a court order against a lower-ranking government official. As the Securities Commission officials point out, the crypto-exchange supposedly has no authority to bring such claims before the court. Well, the basis for regulating cryptocurrencies already sort of exists in the form of the Securities Act of 1933.

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In response to the agency’s action, Grewal said that the situation could be the first time the regulator has explained its views on whether it should create new rules for the cryptocurrency industry. That said, Coinbase’s chief legal officer remained generally dissatisfied with the Commission’s response and believes that there are still many points to be explained in the regulator’s actions. Here is a quote from the expert.

Overall, the SEC’s response only confirms Coinbase’s concerns about the lack of clarity in our industry’s regulatory rules. It is unclear what the Commission may consider to be within or outside its jurisdiction. In addition, it will likely continue to change its own mind as it goes along.

The following tweet by Greval may particularly anger investors.

The Commission staff has also said that Chairman Gensler’s public statements are not official guidance or exact instructions from the SEC itself, meaning that the public cannot rely on them as such.

Such a statement appears to be an attempt to save Gary Gensler's face. Recall that in February 2023, he openly called all cryptocurrencies except Bitcoin securities. And in April Gensler was far less confident at a meeting with congressmen - as a result he couldn't even say whether or not Etherium was a security.

Generally speaking, the words of SEC head Gary Gensler are really hard to form into a single opinion. As we’ve reported before, during his lectures as a professor at the Massachusetts Institute of Technology in 2018, Gensler repeatedly stated that cryptocurrencies are not securities. And it is with this message that the SEC is now “terrorising” many cryptocurrency companies, which is absurd in itself.

Earlier, the regulator forced crypto-exchange Kraken to shut down its staking platform, citing alleged illegal distribution of securities. Also based on these arguments, the SEC sent a Wells notice to Coinbase management, threatening the largest US crypto-exchange with legal action.

A good summary of the SEC’s response to Coinbase’s demands was posted on its Twitter account by a user nicknamed MetaLawMan. Here is his quote.

The Securities and Exchange Commission claims that:
1. It has not yet decided whether to grant Coinbase’s appeal for new regulatory rules;
2. It has every right to wait years (literally) to decide whether to grant the appeal;
3. The regulator intends to continue suing cryptocurrency companies without any new rules.

As a result, the expert believes that the SEC has every chance of “scuttling” any vigorous action by Coinbase in court. Simply put, the Commission is stalling – alas, it has the means to make this process last for years.


We believe that even this statement from the SEC is enough to warrant increased attention from higher authorities. The SEC's reluctance to create an adequate regulatory framework for digital assets is already hampering both the coin niche and the economy. So there are plenty of reasons to take up Gary Gensler's statements and activism towards the decentralised asset industry today.


Look for even more interesting things in our crypto-chat of ex-wealthy people. There we will wait for the new growth phase of the digital asset market to arrive.