Coinbase, the largest cryptocurrency exchange in the U.S., faced off against the Securities and Exchange Commission (SEC) in a federal appeals court in Philadelphia on Monday. The exchange is urging the SEC to establish new rules governing digital assets, following its lawsuit against the agency last year to compel action on a petition for rulemaking filed in 2022.
In its petition, Coinbase called for clarity on when a digital asset qualifies as a security and sought the creation of a market structure framework that accommodates cryptocurrencies. However, the SEC denied this petition in December 2023, asserting that current regulations are adequate for the crypto industry and that no new rules are necessary.
During the court hearing, Coinbase argued that the SEC’s refusal to create clear regulations has made it nearly impossible for the exchange to operate and comply with U.S. laws. This legal battle reflects a broader conflict between the crypto sector and the SEC, which has consistently classified most crypto tokens as securities and has taken legal action against several companies, including Coinbase, for trading tokens that it believes should be registered as securities.
Coinbase has denied these allegations and is currently contesting them in a separate legal case. The crypto industry largely contends that it operates within a regulatory gray area that existing U.S. securities laws do not effectively govern, emphasizing the need for new legislation to properly regulate the sector.
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