US Judge Deems SEC’s Order To Deny Coinbase Rulemaking Petition ‘Arbitrary and Capricious’

A choose has simply ordered the US Securities and Trade Fee (SEC) to supply a extra thorough response to a petition from Coinbase.

In July 2022, the highest US crypto change petitioned the SEC to create a brand new regulatory framework for digital property, however the regulator rejected the proposal in December 2023 with a one-paragraph discover, saying it disagreed the concept securities legal guidelines don’t apply to the crypto trade.

The SEC additionally argued that it had different regulatory priorities and discretion over the “timing and priorities of its regulatory agenda.”

Coinbase, sad with the response, petitioned a court docket to evaluate the SEC’s choice. The change additionally requested the court docket to order the SEC to provoke regulatory proceedings on digital property.

In a brand new ruling filed this week, Circuit Choose Thomas L. Ambro declined to order the SEC to create new guidelines for digital property. Nonetheless, he did inform the SEC to develop its response to Coinbase’s petition.

“The SEC’s order was arbitrary and capricious as a result of it was persuasive and inadequately reasoned. We subsequently partially grant Coinbase’s petition. The answer at this stage is to not order the SEC to provoke regulatory proceedings, however to return Coinbase’s petition to the company for duly substantiated decision.”

Coinbase Chief Authorized Officer Paul Grewal praised the ruling, likening it to a soccer referee having to interpret a penalty flag.

“You may’t simply throw the yellow flag and punish. It’s a must to clarify why and what occurs subsequent: offside, quantity 85, 10 meter penalty, repeat first.”

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