Court tells SEC to lay out why it has declined Coinbase's request for crypto regulations

abcnews.go.com:

A federal appeals court says the U.S. Securities and Exchange Commission needs to better explain why it turned down a request from Coinbase to develop regulations to cover the booming crypto asset sector

HARRSIBURG, Pa. — A federal appeals court says the U.S. Securities and Exchange Commission needs to better explain why it turned down a request from Coinbase to develop regulations to cover the booming crypto asset sector — although the judges stopped short of reversing the agency's decision.

The 3-0 ruling issued Monday by the 3rd U.S. Circuit Court of Appeals was a partial win for Coinbase Global Inc., which went to court after the SEC denied its July 2022 request that the agency make clear how securities laws apply to assets such as cryptocurrencies and tokens.

Coinbase has argued that the SEC has been applying existing securities laws to digital assets, prompting a need for wide-ranging rules.

Asked for comment, a Coinbase spokeswoman pointed out a post on X by Paul Grewal, the company's chief legal officer, that said they “appreciate the court's careful consideration.” Messages seeking comment were left for the SEC.

A June 2023 enforcement action remains pending by the SEC against Coinbase Inc., alleging its trading platform for digital assets operates as an unregistered broker, exchange and clearing agency.

The SEC has said its crypto regulations may change based on “numerous undertakings” it is currently pursuing and that developing new rules would take it away from other duties, the court said.

“A single sentence disagreeing with the main concerns of a rulemaking petition is conclusory and does not provide us with any assurance that the SEC considered Coinbase’s workability objections, nor does it explain how it