Coinbase, the popular cryptocurrency exchange listed on Nasdaq, has taken legal action against the U.S. Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) in order to obtain information regarding their approaches to regulating cryptocurrencies.
Paul Grewal, Coinbase's chief legal officer, expressed his concerns about the lack of clear guidelines from the SEC and the FDIC's influence on financial institutions in a series of posts on social media platform X. He stated, "Financial regulators have utilized various methods to hinder the growth of the digital asset industry," and criticized the SEC for claiming broad authority without providing any consistent or coherent rules. Furthermore, he highlighted the FDIC's pressure on financial institutions to sever ties with the crypto industry.
Coinbase has now filed lawsuits under the Freedom of Information Act to gain transparency into the investigations and communications that impact the cryptocurrency industry. Grewal explained that the lawsuits were filed for requests made over a year ago, seeking important information that is entitled to both Coinbase and the public.
Specifically, Coinbase requested documents from the SEC regarding closed investigations to gain insights into the SEC's perspective on its broad and, according to Coinbase, unlawful authority. One of these investigations focused on Ethereum (ETH), which the SEC publicly declared as not being a security in 2018. However, the SEC refused to provide the requested information. Similarly, Coinbase asked the FDIC for the letters it sent to financial institutions, urging them to halt crypto-related activities indefinitely. The FDIC's own Office of Inspector General criticized this action for potentially hindering innovation and growth in the crypto space. Nonetheless, the FDIC also stonewalled Coinbase's requests.
Grewal concluded by expressing his dissatisfaction with the current regulatory approach, stating that it is not an effective way to regulate and lacks transparency. He called for better standards from financial regulators and expressed gratitude for the court's attention to these important issues, promising to provide updates in the future.
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