Paul Grewal, chief legal officer of Coinbase, announced on May 4 that the Third Circuit has responded to the complaint against the United States Securities and Exchange Commission (SEC) regarding the need for clear rules for trading digital crypto assets. This marks a development in the legal battle for regulatory clarity.
According to Grewal, the court’s response to their complaint against the SEC was a text-only order. The court has instructed the SEC to respond to Coinbase’s writ of mandamus within ten days. A writ of mandamus is a court order addressed to an inferior government official, ordering them to fulfill their official duties properly.
The Third Circuit just issued a text-only order directing the SEC to file a response to our mandamus petition within 10 days (and gave us 7 days for a reply). Here’s the text of the order:
TEXT ONLY ORDER (Clerk) At the direction of the Court, Respondent is ordered to file an…
— paulgrewal.eth (@iampaulgrewal) May 3, 2023
Grewal stated that the court had granted Coinbase the right to file a reply to the SEC’s response within seven days of the filing. He also expressed appreciation for the court’s thorough examination of the case.
Coinbase, the largest cryptocurrency exchange in the US, filed a lawsuit in April requesting that the court compel the SEC to publicly disclose its stance on a petition that had been submitted several months prior. In the petition, the exchange posed 50 specific questions about the regulatory treatment of certain digital assets. The questions were wide-ranging, covering topics such as how tokens are classified as securities and seeking clarification on various other matters.
Despite the lack of public response to the petition, the SEC has taken action by increasing enforcement actions and issuing warnings to crypto exchanges. In fact, the commission has even issued a Wells Notice to Coinbase in the past. A Wells notice letter typically warns a company that the SEC may follow with an enforcement action.
Due to the ongoing regulatory issues faced by the company, the U.S. investment bank, Citi, downgraded the shares of the crypto exchange from “buy” to “neutral” and has also lowered its price target. The bank has cited “too many unknowns” as the reason for this downgrade. According to Citi analyst Peter Christiansen, the downgrade will be Until the regulatory ‘rules of the road’ are better established in the U.S.