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The SEC has never been super cozy with the crypto industry, but things have gotten especially prickly lately. In one of the latest illustrations of friction, Coinbase recently filed an action in US federal court to compel the Commission to respond to the rulemaking petition it submitted last summer. This “flipping the tables” move follows the company’s disclosure in March that the SEC is investigating it.

A blog post from Coinbase chief legal officer Paul Grewal explains the company’s motivations for filing the legal action – which takes the form of a petition for writ of mandamus to the SEC. This Reuters article from Alison Frankel gives more detail on why the move is so unusual:

In the rare instances in which regulated businesses have persuaded appellate requests to order federal agencies to respond to their rulemaking petitions, the allegedly unreasonable delay has been a matter of years, not months.

As Alison notes, the action says that Coinbase has met with the SEC more than 30 times over the past year to present paths to registration for digital assets. In light of the Commission’s stepped-up enforcement stance against crypto, Coinbase wants the SEC to put its cards on the table. Here’s an excerpt from Coinbase’s court filing:

The SEC’s refusal to respond to Coinbase’s rulemaking petition is, in the parlance of the Administrative Procedure Act (APA), “agency action” that has been “unreasonably delayed.” 5 U.S.C. § 706(1). Coinbase brings this mandamus action to compel the SEC to do one simple thing: state on the record whether or not it will initiate proceedings to establish the ground rules that it has charged others and may soon charge Coinbase with failing to follow. The APA requires the Commission to take that simple step.

Moreover, all of the Commission’s actions suggest it has already decided internally to deny Coinbase’s petition, and is simply withholding a formal decision from Coinbase and the public, with the effect (and perhaps intent) of frustrating judicial review. But Coinbase and the crypto industry have an urgent right to a judicially reviewable decision, especially when facing unlawful, arbitrary, and capricious threats of enforcement from the Commission on the very same issue in the interim.

– Liz Dunshee