Coinbase, a cryptocurrency exchange, filed a lawsuit against the Securities and Exchange Commission (SEC) late on Monday, requesting that a federal court order the organization to reply to its demand for more lucid cryptocurrency legislation.
Last July, the exchange submitted what is known as a “petition for rulemaking” to the SEC, requesting that the agency develop and approve regulations for securities backed by digital assets. Additionally, it sought clarification and assurance about the regulatory handling of digital asset securities by asking 50 specific questions.
While some concerns concentrate on subjects like asset custody and trading crypto asset securities on SEC-regulated exchanges, some of the queries center on the SEC’s process for designating certain tokens as securities.
Coinbase chief legal officer Paul Grewal wrote in a blog post that the SEC’s lack of public response to that petition prompted the company to file the legal challenge.
Grewal stated that “Coinbase and other cryptocurrency companies are at risk for regulatory enforcement actions from the SEC, even though we are not aware of how the SEC believes the law applies to our business.”
The US Court of Appeals for the Third Circuit will receive the petition.
The exchange’s issue comes amid a regulatory crackdown in the U.S., where organizations like the SEC and the Commodity Futures Trading Commission (CFTC) have increased their monitoring of companies that deal in digital assets so far this year.
The majority of the crypto sector feels that because the business is not currently covered by U.S. securities laws, new legislation is required to regulate it.
According to SEC Chair Gary Gensler, crypto businesses should abide by current laws and not require additional rules tailored specifically to the industry.
The SEC staff was planning to propose enforcement action against Coinbase, the business said in a March disclosure. In a blog post at the time, the business declared its readiness to take legal action against any upcoming enforcement actions.
The company acknowledged an SEC investigation into its asset listing procedures, staking programs, and yield-generating goods in July when it also submitted its petition for regulation.