A judge has recently instructed the U.S. Securities and Exchange Commission (SEC) to provide a more comprehensive response to a petition submitted by Coinbase.

In July 2022, the leading American cryptocurrency exchange filed a petition with the SEC, seeking the establishment of a new regulatory framework for digital assets. However, the regulator rejected the proposal in December 2023, issuing a brief notice stating its disagreement with the notion that securities laws are not applicable to the crypto industry.

The SEC also argued that it had other regulatory priorities and possessed discretion regarding the timing and priorities of its regulatory agenda.

Feeling dissatisfied with the SEC’s response, Coinbase sought judicial review of the decision and requested that the court compel the SEC to initiate a rulemaking proceeding focused on digital assets.

In a recent ruling issued this week, Circuit Judge Thomas L. Ambro declined to mandate the SEC to create new regulations for digital assets. Nevertheless, he directed the SEC to elaborate on its response to Coinbase’s petition.

“The SEC’s order was arbitrary and capricious because it lacked sufficient reasoning and was conclusory. Therefore, we partially grant Coinbase’s petition. The remedy, at this stage, is not to order the SEC to commence rulemaking proceedings but to remand the case back to the agency for a more adequately reasoned disposition of Coinbase’s petition.”

Paul Grewal, Coinbase’s Chief Legal Officer, commended the ruling and likened it to a football referee being required to explain a penalty flag.

“You can’t simply throw the yellow flag and impose a penalty. You must provide an explanation of why and what comes next: offsides, number 85, 10-yard penalty, repeat first down.”

Don’t Miss a Beat – Subscribe to receive email alerts directly in your inbox.

Check Price Action

Follow us on X, Facebook, and Telegram.

Surf The Daily Hodl Mix

Generated Image: Midjourney