Coinbase (COIN.US) and the U.S. SEC go to court over new cryptocurrency regulations.

The United States' largest cryptocurrency exchange Coinbase (COIN.US) clashed with the Securities and Exchange Commission (SEC) on Monday in the Federal Appeals Court in Philadelphia, with Coinbase urging the SEC to create new rules for digital assets. Coinbase sued the SEC last year in an attempt to force the regulatory agency to act on a rulemaking petition submitted by Coinbase in 2022. In the petition, Coinbase urged the SEC to clarify the status of digital assets as securities and to create a new market structure framework compatible with cryptocurrencies. In December 2023, the SEC rejected Coinbase's petition to create new rules, stating that existing financial market regulations also apply to cryptocurrencies. SEC Chairman Gary Gensler has repeatedly stated that most cryptocurrencies are securities and fall under the jurisdiction of the SEC. On Monday, Coinbase asked the Federal Appeals Court to overturn the SEC's decision, claiming that the SEC has made it impossible for the cryptocurrency company to operate and comply with U.S. regulations. Coinbase's lawyer Eugene Scalia told the three-judge Appeals Court that the SEC has been arbitrary and capricious, failing to provide Coinbase with more answers on how to register with the agency and comply with U.S. laws. The cryptocurrency industry generally believes that its operations are in a regulatory gray area, not subject to existing U.S. securities laws, and that new legislation is needed to regulate the industry. SEC lawyers argued that the agency does not need to create new rules for the industry, as existing regulations are sufficient. In addition to the court battle, Coinbase is also urging cryptocurrency investors to contact their House representatives to support the "Financial Innovation and Technology Act of the 21st Century" (FIT21) passed earlier this year. The bill aims to provide a clear legal and regulatory framework for digital assets and blockchain technology.