In a remarkable escalation in the ongoing conflict between the crypto industry and the Securities and Exchange Commission (SEC), Coinbase has moved a federal court seeking a writ of mandamus. The rarely invoked legal maneuver is essentially an official request for a court to command a party to perform its statutory duties.
In the given context, Coinbase's strategy employs a writ to press the SEC into adopting clear regulations for cryptocurrencies. This audacious move suggests a last-ditch effort, as obtaining a writ of mandamus typically involves overcoming great legal hurdles.
The SEC countered by asserting that cryptocurrency regulation does not fall within its jurisdiction. The commission stated, "The securities laws do not obligate the Commission to adopt rules such as those proposed by Coinbase." The SEC views its mandate as maintaining fair, orderly and efficient markets. Still, it has been vague about whether it considers cryptocurrencies to be securities, a crucial point for regulatory clarity.
In response to Coinbase's move, the SEC further contended that comments by its chairman, Gary Gensler, do not constitute official policy.
Coinbase and others argue that the SEC's evasiveness and subsequent enforcement actions add to the volatility and unfairness of the crypto market. A failure to provide clear regulatory guidelines and using enforcement as a stand-in for rulemaking could be seen as a lack of discretion, per previous Supreme Court rulings.
Coinbase's Chief Legal Officer Paul Grewal addressed this situation on Twitter, stating, "The SEC told the court that rulemaking might take years, and they're not in any hurry."
The SEC confirmed that it is indeed working on rules but gave no definite timeline. While it could take years for a court decision on the mandamus petition, legal experts generally agree that Coinbase's request may be premature.