SEC Wrongly Refused Crypto Rules, Court Says in Coinbase Case

The SEC provided insufficient justification for rejecting Coinbase Inc.‘s request for rules specific to the cryptocurrency industry, the Third Circuit said Monday.

The agency’s next step under the ruling will be to reconsider Coinbase’s petition, but the court declined at this stage to order the agency to actually start rulemaking.

The SEC’s denial of Coinbase’s request to issue rules clarifying how and when federal securities laws apply to digital assets was “arbitrary and capricious” because it was “conclusory and insufficiently reasoned,” Judge Thomas L. Ambro said.

Coinbase’s case at the US Court of Appeals for the Third Circuit is ...