Coinbase demands regulation, again

Coinbase filed a heated brief in its case against the SEC in the Third Circuit's Court of Appeals.

The big picture: America's largest crypto exchange is leading the charge to force the country's leading financial regulator to give the digital asset industry clearer policies to allow the industry to operate in compliance.

• Notably, there are two suits between the parties underway. One where Coinbase is the plaintiff suing for rules, and another where the SEC is suing Coinbase for breaking the rules it argues it already has.

Zoom in: In Coinbase's suit against the SEC, it draws attention to the agency's denial of its 2022 petition for new rules that pertain to the digital asset industry.

• Coinbase has requested that the court issue a writ of mandamus against the agency. In other words, it's asking the court to affirm its contention that the agency has failed to do its duty.
• In May 2023, the SEC told the court that the company's request didn't meet the standard for such an order.

What they're saying: "The Commission's ongoing regulatory efforts regarding crypto assets that are securities or offered and sold as such—including the solicitation of comments from the public across numerous fronts—belie the assertion of closed-mindedness," agency staff wrote in its response.

The other side: In Coinbase's new filing, the company wrote, "The agency knows that compliance is impossible. And that is the point. The SEC does not want to regulate digital asset firms. It wants to destroy them."

• The SEC sent Axios a list of digital asset firms that had registered with the agency, many of which only did so as part of settlements that ultimately led to the dissolution of the underlying companies — so, registered into non-existence.

"The only consistency the agency can claim is that it has adopted a standard so abstract and empty that it can mean whatever the Commission likes," Coinbase's attorneys, from the law firm Gibson, Dunn and Crutcher, write in their response.

Flashback: The move fits into Coinbase's strategy of making its displeasure with the SEC public.

• Consensys is one major crypto firm that has followed its lead.
• Robinhood, which received a notice from the agency indicating it was likely to be sued, responded with more aggressive rhetoric than regulated entities usually use in response to their regulator.

What we're watching: Which of the two cases progresses most quickly.