Coinbase Asks Court to ‘Clear Away Cloud’ Over Crypto Market

Coinbase reportedly asked the U.S. Court of Appeals to rule that the trading of crypto assets on its platform are not securities transactions, but asset sales.

The company said this in a petition to the court that is part of an appeal tied to a Securities and Exchange Commission (SEC) lawsuit filed in 2023 that alleges Coinbase operated as an unregistered securities broker, Seeking Alpha reported Wednesday (Jan. 22).

Coinbase said in its petition that trades on its platform are not securities transactions because buyers do not obtain rights against the asset’s issuer as they do with stocks, bonds and other securities, according to the report.

A ruling on this question “will allow the Court to clear away the cloud that currently hangs over the cryptocurrency market,” the company said, per the report.

The SEC sued Coinbase in June 2023, claiming that the platform had been letting its own users trade unregistered securities.

Gurbir S. Grewal, who was director of the SEC’s Division of Enforcement at the time, said in a press release announcing the lawsuit: “You can’t simply ignore the rules because you don’t like them or because you’d prefer different ones: the consequences for the investing public are far too great.”

In a statement provided to PYMNTS at the time, Coinbase Chief Legal Officer and General Counsel Paul Grewal said: “The SEC’s reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance.”

In September, in a thread posted on X, Paul Grewal wrote that the SEC has refused to provide regulatory guidance while also engaging in an “arbitrary” enforcement campaign.

“Regulation by enforcement does nothing but damage American consumers, innovation, US competitiveness, and our national security,” Paul Grewal wrote. “Coinbase is determined to leave no stone unturned in our efforts to get clarity for our industry and the millions of Americans who hold crypto.”

On Tuesday (Jan. 21), the SEC, now led by Acting Chairman Mark T. Uyeda, launched a crypto task force focused on developing a “comprehensive and clear” regulatory framework for crypto assets.