Several allies joined Coinbase Inc. (COIN) in its court fight against the U.S. Securities and Exchange Commission (SEC) to force the agency to rethink its refusal to write specific rules to govern the crypto industry, with Paradigm, the Crypto Council for Innovation and others filing outside arguments with the circuit court.
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"As long as the SEC’s registration process requires a centralized issuer, it will be incoherent for crypto assets, meaningful disclosures will not happen, and the public will not have access to the material information that it needs," according to the Paradigm brief filed with the U.S. Court of Appeals for the Third Circuit. It also cited the fact that the Republican duo on the five-person commission is in stark disagreement with Chair Gary Gensler that what the SEC is doing is clear, fair and based in the law.
Coinbase had formally petitioned the SEC to write crypto industry rules in 2022, and the agency rejected the petition in December. Last week, the company filed a legal action trying to force the regulator to reverse that decision.
The SEC isn't giving the industry a chance for input on how it's being governed, and that's pushing businesses to seek a better arrangement in other countries, the Crypto Council for Innovation (CCI) said in its amicus brief, which is a legal position offered by an outside party in a case.
"Deprived of traditional rulemaking, good actors are forced to decipher the SEC’s evolving views based on public statements by officials, litigation filings, and (sometimes contradictory) judicial rulings in enforcement actions," argued CCI , a group advocating for policies friendly to the digital assets sector. "Industry participants seeking regulatory clarity are fleeing abroad to jurisdictions that offer the regulatory guidance the SEC refuses to provide."
Paul Grewal, Coinbase's chief legal officer posted on X that the company is "grateful" to have the influx of briefs, which also came from other groups including the U.S. Chamber of Commerce and Texas Blockchain Council. The court can consider such legal interpretations from interested parties when it weighs the underlying question of the dispute.
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