Coinbase has filed two Freedom of Information Act (FOIA) requests directed at U.S. regulators.
The cryptocurrency exchange is seeking the release of documents pertaining to the regulatory actions undertaken by U.S. banks against crypto companies. This was noted by Coinbase Chief Legal Officer Paul Grewal.
“We have submitted two additional sets of FOIA requests in our ongoing effort to gain clarity on the stance of regulatory agencies concerning digital assets. In short, as long as the government remains uncooperative, Coinbase will continue its efforts.”
The Federal Deposit Insurance Corporation (FDIC) has advised banks to cap deposits from cryptocurrency firms at 15% of their total deposits. Coinbase has also initiated another FOIA request aimed at understanding how regulators have responded to comparable requests.
Reportedly, the FDIC implemented these restrictions without prior public consultation, which goes against the typical protocol for banking regulators in the U.S. Grewal explained that these new FOIA requests are distinct from earlier requests made over a year ago, which are currently involved in federal litigation.
“Each set of requests is distinct from our FOIA filings from more than a year ago that are now subject to federal lawsuits.”
The FOIA in the U.S. grants the right to request access to records and information held by federal agencies, including government documents related to financial transactions and cryptocurrency regulation.
Current Status of the Coinbase Legal Matters
For the last few years, Coinbase has been advocating for the U.S. Securities and Exchange Commission (SEC) to establish clear regulations for the industry. In July 2022, the company submitted a petition to the Commission seeking this, and in April 2023, it pursued the matter in court.
SEC Chair Gary Gensler dismissed Coinbase’s claims, asserting that existing laws are applicable to the industry. In March, the platform requested that an appellate court mandate the regulator to create rules.
In June 2023, the SEC filed charges against Coinbase, accusing the firm of violating securities laws in relation to its Ethereum (ETH) staking offerings. Subsequently, Coinbase sought documentation from the regulator concerning the classification of ETH to ascertain whether the agency considers it a security or a commodity.
“We allege that Coinbase, while subject to securities laws, unlawfully merged and offered exchange, broker-dealer, and clearinghouse services.”
Gary Gensler, SEC Chair
Following these developments, Coinbase also initiated legal action against both the SEC and the FDIC for failing to provide clarity regarding the regulation of the cryptocurrency industry.
The company filed a FOIA request with the authorities, specifically seeking information regarding the Ethereum 2.0 investigation and two closed SEC cases: Enigma MPC and Ether Delta.
Despite its efforts, Coinbase was unsuccessful, which led to a court petition to overturn the SEC’s decision. The argument put forth suggested that the regulator’s lack of clear guidance creates obstacles for compliance with existing U.S. laws.
Eugene Scalia, representing Coinbase, expressed concerns that the SEC’s ambiguous actions left the exchange “without a clear path to compliance.”
“I leave this court with even less understanding of the SEC’s perspective on this subject than I had upon entering.”
Eugene Scalia, Coinbase’s attorney
The judges recognized that the SEC could choose to prioritize its rulemaking but questioned the lack of attention given to cryptocurrency regulation. This case highlights the ongoing discord between the SEC and the crypto sector, with the regulator insisting on classifying most crypto tokens as securities under its jurisdiction.
Coinbase and other crypto firms are challenging this view, arguing that the sector operates in a legal gray area and are calling for new legislation to oversee digital currencies.
The Growing Impact of Crypto in the U.S.
As part of its initiative for better crypto regulation, Coinbase has introduced Stand With Crypto, which includes a political action committee (PAC).
The upcoming U.S. elections in November are set to feature a contest between Republican Donald Trump, who aims to revitalize the crypto sector, and Democrat Kamala Harris, who holds more favorable views on cryptocurrencies than the current President Joe Biden, yet less so than Trump’s. Many crypto supporters believe this election could be pivotal for the industry, and they are prepared to financially back their candidates.
According to CNBC, crypto companies have accounted for nearly half of all corporate contributions in this election cycle. The amount of crypto donations for the upcoming U.S. presidential election has approached $200 million.
Crypto analyst James Delmore emphasized that California remains a pivotal hub for the cryptocurrency industry, owing to its numerous blockchain companies, and the political landscape in the state will be crucial for future legislative developments in this arena.
