SEC Under Attack for Anti-Crypto Practices: Appeal Court Questions Regulator’s Denial of Rulemaking Petition
The Securities and Exchange Commission (SEC) is facing criticism over its anti-crypto policies as it recently came under fire before the Court of Appeals for the Third Circuit. Jake Chervinsky, the chief legal officer of Variant Fund, a venture capital firm focusing on cryptocurrencies, stated that the SEC has been “roasted” during the hearing. Chervinsky expressed hope that the Third Circuit might put an end to what he called the SEC’s “unlawful campaign of regulation by enforcement.”
The case in question involves cryptocurrency exchange Coinbase, which presented its arguments to the Third Circuit on Tuesday. The company challenged the SEC’s denial of its petition for rulemaking, accusing the regulator of acting in an “arbitrary” and “capricious” manner. Coinbase’s legal representative, Paul Grewal, the company’s chief legal officer, emphasized that the SEC failed to provide a “reasonable explanation” for its denial. Grewal further argued that regulatory actions driven by enforcement do more harm than good to American consumers, innovation, national security, and US competitiveness.
While it remains to be seen how the appeals court will ultimately rule, the SEC faced tough questions from the judges regarding its refusal to prioritize digital assets in its rulemaking agenda. Interestingly, according to Dave Michaels, a reporter for the Wall Street Journal, the SEC faced more scrutiny from the court than Coinbase did.
As the crypto industry continues to evolve and attract more attention from regulators, the outcome of this case could have significant implications for the SEC’s approach to cryptocurrencies and the overall regulatory landscape.