Crypto exchange Coinbase recently dismissed the response of the US Securities and Exchange Commission (SEC) to its petition related to rule-making.
It once more demanded that the regulatory agency take action on a request that it had made in the previous year about developing formal rules for digital assets that it categorizes as securities.
If the SEC is not ready to do that, the crypto exchange wants the courts to force the regulator into taking action.
The filing
On Friday, Coinbase submitted a filing in Manhattan federal court in which it accused the SEC of intransigence because it had refused to take action on the rule-making petition that was submitted last July.
Previously, the regulatory body had asked the court for a delay, which had been given in June. But, it was revealed in a recent filing from its lawyers that a recommendation had been made.
However, there has been no guidance issued as yet. Eugene Scalia, the outside counsel of Coinbase, said that this pattern was an indication that the SEC was not planning on taking action.
Scalia said that this refusal to take action meant that the digital asset industry would be in the midst of an unprecedented Catch-22.
No action
Son of Antonin Scalia, the late Supreme Court Justice, and a partner at Gibson Dunn, Scalia said that the unilluminating report from the SEC was just more bureaucracy.
He added that it was becoming increasingly evident that the SEC would only take its obligations seriously only through a mandamus.
This is a judicial writ issued to a lower court from a higher one in which the former is ordered to do its statutory duty.
The original request from Coinbase had been a petition for rule-making, in which it had asked the SEC to outline how companies could comply with federal securities laws.
Nearly a year after Coinbase submitted the petition, the SEC filed a lawsuit against the crypto exchange on June 6th over allegations of operating as an unregistered securities exchange.
After the lawsuit, the agency was ordered by the Third Circuit of the US Court of Appeals to disclose whether it had decided to deny the petition of the crypto exchange.
The SEC
The chairman of the SEC, Gary Gensler, has repeatedly stated that existing laws show how companies in the digital asset industry should comply with the law.
He also accused these digital asset companies of not following the rules. On October 11th, the SEC submitted a filing and said that a recommendation for action had been issued on the request.
However, Scalia stated that the response had been deliberate and inadequate. He said that the unspecified internal advice that its staff offers is not adequate.
He added that it was just an attempt by the SEC to avoid a potential judicial review of its denial.
He said that if they have a recommendation related to Coinbase’s petition, then the court should force the SEC to disclose the said recommendation to the public within 30 days.