This was argued in a federal appeals court in Philadelphia, as part of long-running tensions between the leading US cryptocurrency exchange and the financial regulator SEC. Coinbase has pushed the SEC to create a better regulatory environment for crypto assets in the US, Reuters reported.

In December 2022, Coinbase filed a petition stating that the current crypto regulatory framework is “unworkable.” The exchange argued that current regulations make it difficult for crypto companies to operate properly in America. However, the SEC rejected this petition and did not meet Coinbase’s demands.

Coinbase emphasized in court on September 23 that regulatory uncertainties remain and crypto companies have difficulty operating in the US due to unreasonable regulations from the SEC.

Coinbase’s lawyer, Eugene Scalia, told the appeals court that the SEC has refused to provide information on how crypto companies can register with the agency and comply with US laws. Scalia argued that this makes it difficult for crypto companies to operate legally in the US market.

SEC attorney Ezekiel Hill opposed these claims and stated that the SEC did not have to create a new set of rules.

Hill stated that Coinbase wanted to structure its business in a way that did not comply with the existing regulatory framework, so the SEC did not need to give special treatment.

Hill emphasized that the SEC is not obliged to create rules based on Coinbase’s own business model.

While the judges in the court stated that the SEC generally followed a cautious approach to rulemaking, they questioned why the cryptocurrency market was not included in these processes. This was seen as a criticism of why regulatory uncertainty towards crypto markets has persisted for a long time.

The background of this case is a lawsuit filed by the SEC last year against Coinbase on the grounds that it did not register as a broker while operating in the USA.

The SEC claimed that the staking program offered by Coinbase and more than 10 digital assets traded on the platform were securities. These allegations reflect the SEC’s expansive approach to whether digital assets should be considered securities.

However, Coinbase’s fight with the SEC is not limited to this case. On June 27, Coinbase filed a lawsuit against the SEC and the Federal Deposit Insurance Corporation under the Freedom of Information Act. In this case, Coinbase alleged that the SEC and other regulators refused to provide requested information.

This process stands out as an important case that shows how the crypto industry is dealing with the regulatory environment in the US.

Coinbase argues that regulatory uncertainty should be eliminated and crypto companies should operate under clear rules.

However, the SEC argues that the current regulatory framework is sufficient and new rules are not required.

This conflict between Coinbase and the SEC may not be limited to this case only. In particular, whether crypto assets will be considered securities and the future of crypto regulations in the US will depend on the outcome of such cases.

This case could be an important turning point that closely concerns the future and regulatory environment of the crypto industry in the United States.