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Paul Grewal, Coinbase General Counsel, announced on May 4 that the Third Circuit has responded to a complaint against the U.S. Securities and Exchange Commission (SEC) regarding the need for clear rules for trading digital cryptocurrency assets. This marks the development of a legal battle for regulatory clarity.
According to Grewal, the court’s response to their SEC complaint was a text order. The court directed the SEC to respond to Coinbase’s mandamus court order within ten days. A mandamus order is a court order addressed to a lower government official, ordering him to properly perform his official duties.
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 said the court granted Coinbase the right to file a response to the SEC response within seven days of filing. He also expressed his gratitude to the court for the careful consideration of the case.
Coinbase, the largest cryptocurrency exchange in the US, filed a lawsuit in April demanding that the court force the SEC to publicly disclose its position on a petition that was filed months earlier. In the petition, the exchange raised 50 specific questions about the regulatory attitude towards certain digital assets. The questions were broad, covering topics such as how tokens are classified as securities and seeking clarification on various other issues.
Despite the lack of public response to the petition, the SEC took action, stepping up enforcement measures and issuing warnings to cryptocurrency exchanges. In fact, the commission has even issued a Wells Notice to Coinbase in the past. The Wells notice letter usually warns the company that the SEC may take enforcement action.
Related: Coinbase Stops Issuing New Bitcoin-Backed Loans Through Borrow Service
Due to ongoing regulatory issues facing the company, US investment bank Citi has downgraded the stock of the cryptocurrency exchange from Buy to Neutral and also lowered its price target. The bank cited “too many unknowns” as the reason for the downgrade. According to Citi analyst Peter Christiansen, the downgrade will continue until the U.S. can better enforce regulatory “rules of the road.”
