Legal Battles Heat Up as Crypto Regulations Stall!

The lack of clear crypto regulations in the United States has created an unending war between the Securities and Exchange Commission (SEC) and established web3 firms led by Coinbase Global Inc. (NASDAQ:COIN) and Ripple Labs. Although the topic of digital assets has been cited as a major issue in the upcoming US general election, the current administration has not enacted clear crypto regulations.

As a result, most web3 leaders have faulted the leaders for lagging behind other major jurisdictions that have already enacted a clear digital assets framework.

For instance, the United Arab Emirates (UAE) has attracted more web3 companies in the recent past due to its clear and friendly digital assets regulations. The European Union is fast rolling out the Markets in Crypto-Assets (MiCA) regulatory framework to ensure a sustainable web3 and digital assets adoption.

US SEC vs. Coinbase Litigation

For the past years, the US SEC has accused Coinbase Global of operating as an unregistered securities exchange, broker, and clearing agency. Although the US SEC has failed to convince the court in several cases that digital assets have violated securities laws, the agency has continued to fight web3 companies.

For instance, a US court recently ruled that Binance’s native coin did not violate securities laws under the Howey test. Last year, in the lawsuit against Ripple a judge ruled that XRP sales on exchanges does not constitute investment contracts.

Coinbase Fights Back

The Coinbase attorneys led by its Chief Legal Officer Paul Grewal have accused the SEC’s Chair of being a double agent while regulating the digital assets industry. According to recent court documents sent to Judge Katherine Polk Failla, Coinbase has urged the court to force the SEC and Gensler to produce relevant documents. Coinbase is seeking personal emails sent by Gensler both before his tenure as chair and as a professor at MIT.

Bigger Picture

The mass adoption of digital assets by institutional investors and retail traders has attracted more attention from lawmakers. The recent approval of spot Bitcoin and Ethereum ETFs is a clear indication of increased demand.

However, web3 leaders are more inclined to support lawmakers who are for the digital assets industry and not against it.

Read Also: Coinbase Sues SEC and FDIC, Demands Transparency in Crypto Regulations