Coinbase can't force the SEC to write new rules, SEC argues in new brief

The SEC has filed a new form arguing that Coinbase's petition to order the agency to develop a new regulatory system for crypto "from the ground up" should be denied. "The Commission’s determination that the rulemaking Coinbase seeks is currently unwarranted was both reasonable and reasonably explained," the SEC said, in a case before the U.S. Third Circuit Court of Appeals. 

The SEC's filing argues that it's unreasonable to call existing digital asset regulation "unworkable," and denied that a whole new regime is needed, as "the Commission reasonably denied the petition and referred to a number of proposed rules and undertakings that it was pursuing that address questions regarding the application of the existing framework to crypto asset securities," the brief states.  

The brief contains several forceful denials of Coinbase's petition. For instance, the brief scoffs at Coinbase's proposal that the courts struggle with applying existing law to digital assets cases, saying the current law is sufficient for pursuing these cases, and "...the courts presiding over those cases have agreed, an objective judicial assessment that cannot be squared with Coinbase’s protestations that those enforcement actions are an unauthorized 'power grab' and an act of agency 'self-aggrandizement,'" the brief states. 

The SEC was right not to dedicate its time to crypto asset rulemaking, the agency argues, and Coinbase was wrong for trying to force them to write regulations anyway. "In the absence of a congressional mandate or a threat to human health and safety—neither of which is present here—courts rarely overturn an agency’s denial of a rulemaking petition and none have done so in circumstances akin to these," the SEC writes in its brief, before saying that an economic impetus for a rulemaking petition is also insufficient. 

Coinbase's top lawyer, Paul Grewal, responded to the filing in a post on X. "[The SEC's] basic response: 'no additional explication is required to understand the Commission’s policy decision.' But other than denying any obligation to explain itself, they simply rehash the fallacy that registration as is is 'workable,'" Grewal wrote, adding, "We are confident the Court will see this for what it is."

Edited: Corrected to clarify the filing was from the SEC, not a ruling by the Court.