US judges demand clarification from SEC for refusing to set clear crypto rules.

A three-judge panel of the Third Circuit US Court of Appeals asked the SEC why it did not respond to Coinbase's clear rules. A recent ruling by the panel called the SEC's actions “arbitrary and capricious.”

The US Third Circuit Court of Appeals on Monday asked the SEC to explain itself after refusing to set clear crypto rules for Coinbase after the regulator issued the exchange with a March 2023 notice.

As one of the justices put it, “Rather than compel the agency to issue a rule, we order it to explain its decision. Another cautioned against giving weak explanations, as the SEC has been doing.

SEC vs. Coinbase

The SEC's case against Coinbase began in March 2023, when Wells issued notice to the exchange for violating securities regulations through its stock services and asset listings.

Coinbase responded with confidence in the legality of its operations and sought to engage with the regulator to clarify the basis of the Welsh notice and develop clear regulations.

The SEC, however, said the current securities regulations were insufficient to regulate cryptos and filed suit in June 2023.

Recent developments

Coinbase won against the regulator following a ruling to suspend the case on grounds of novelty, as various courts across the country reached different conclusions on the security of cryptos.

The SEC's case will now go to the Court of Appeals, where it will be decided whether it should be heard by the District Court.

This new development from the US Court of Appeals for the Third Circuit deals another blow to the SEC with one week to go until the end of Gary Gensler's term as SEC chairman.

Meanwhile, Coinbase Legal Head, Paul Grewal, considers this a victory for Coinbase