In a crypto world filled with villains, Coinbase has always cast itself as the good guy—a company that follows the rules and has worked with regulators and law enforcement since day one. So when the good guy of crypto decides to sue the federal government, it’s worth paying attention.
On Monday, Coinbase filed suit against the Securities and Exchange Commission, asking a federal appeals court to issue an order instructing the agency to do its job—which in this case, says Coinbase, is to answer the company’s petition seeking clearer regulations.
Coinbase has a point here. Even though “the need for regulatory clarity” is a talking point that the industry will shout at anyone who will listen, Coinbase and other crypto firms are right to complain about the SEC’s behavior. In the past two years, the agency has been filing lawsuits and extracting settlements that presume an unresolved legal question—whether or not a token is a security—has been resolved. Companies, like individuals, are entitled to hear from the state what is or isn’t allowed, especially when the future of their business is at stake. It’s called the rule of law.
But just because you’re right doesn’t always mean you get to win. Even though judges decide cases through a prism of law, personal biases slip in, and right now, it’s not hard to imagine that at least some of the judges on the Third Circuit, which is deciding the case, view crypto in a poor light. This could color their decision as to whether, as Coinbase claims, the SEC needs to get on with issuing rules for the crypto industry. The judges may conclude that the agency needs more time, or perhaps they will agree with the SEC that its rules are plenty clear enough.
Coinbase’s lawyer told Fortune that, even if the court sides with the SEC, this lawsuit is just an opening salvo that will give it standing to sue over broader issues. This is a sign that the company is willing to raise the stakes as it digs in for a prolonged legal fight. This is brave but also shows that Coinbase has its back against the wall and that it has no other choice but to battle the federal government—and that’s not a position any company wants to find itself in.
Jeff John Roberts
An OpenSea executive is on trial in New York this week for front-running NFT sales in a case that has implications for securities and insider trading law. (Fortune)
House Republicans put forth a revised version of stablecoin legislation that narrows its scope and would expand the influence of state regulators. (Bloomberg)
Visa is hiring blockchain engineers for an “ambitious” product plan as the company doubles down on its crypto payment strategy. (The Block)
A robot trained on A.I. to spit out artwork has earned its owner $3 million by minting the most popular as NFTs. (Fortune)
Some crypto investors, shaken by the events of the past year, are choosing gold over Bitcoin. (WSJ)
MEME O’ THE MOMENT
Worth a shot? Coinbase pushes “Stand With Crypto” NFT:
This is the web version of Fortune Crypto, a daily newsletter. Sign up here to get it delivered free to your inbox.