Outside Source
A panel of three judges said they would not force the SEC to implement rulemaking on crypto but referred to the commission’s “fogginess” potentially harming digital asset firms.
News
The US Court of Appeals for the Third Circuit has issued an opinion in cryptocurrency exchange Coinbase’s civil case with the Securities and Exchange Commission (SEC), finding the regulator’s decision to deny rulemaking was “arbitrary and capricious.”
In a Jan. 13 opinion issued by the Third Circuit, a panel of three judges granted a petition from Coinbase in part but declined to order the SEC to launch rulemaking proceedings that could clarify the commission’s position on crypto.
Coinbase’s appeal stemmed from a 2022 request for the SEC to create “rules to govern the regulation of securities that are offered and traded via digitally native methods, including potential rules to identify which digital assets are securities.”
The SEC denied Coinbase’s petition in 2023, prompting the exchange to appeal to the Third Circuit. According to the judges, the SEC’s order denying Coinbase’s request for crypto rules was “conclusory and insufficiently reasoned, and thus arbitrary and capricious.”
Jan. 13 Third Circuit opinion on Coinbase v. SEC case. Source: PACER
“We properly remand to the SEC to explain itself; it should not give yet another poor explanation in an already-long line of them,” said Judge Stephanos Bibas in a concurrence. He continued:
“New inventions create new fraud risks, and the agency needs to guard against them. But sporadically enforcing ill-fitting rules against crypto companies that are trying to follow the law goes way beyond fighting fraud. It targets a whole industry and risks de facto banning it. On remand, the SEC must grapple with that problem.”
This is a developing story, and further information will be added as it becomes available.
This article first appeared at Cointelegraph.com News
