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The U.S. Securities and Exchange Commission (SEC) argued before an appeals court on Monday that Coinbase, a prominent cryptocurrency exchange, had not provided sufficient evidence to support the need for the regulator to develop specific regulatory guidelines for the digital asset industry.

The federal regulator has requested the court to dismiss Coinbase's petition seeking customized regulatory guidance exclusively for the digital asset industry. The SEC, in a filing, stated that it is still in the process of reviewing the petition and has not reached a decision yet, affirming that it is actively considering the submission.

In July 2022, Coinbase initially submitted a petition to the SEC, seeking guidance on matters concerning digital assets. Amidst an intensifying legal dispute, the cryptocurrency trading platform took further action by filing a Mandamus petition with the U.S. Court of Appeals for the Third Circuit last month. This petition aimed to compel the regulator to address Coinbase's original petition, coinciding with Coinbase's response to an SEC Wells Notice within the same week.

The SEC, in its response on Monday, highlighted Coinbase's unrealistic expectation of receiving a response within a year, emphasizing that the regulatory agency has historically taken between five to ten years to address petitions in various other sectors.

"As Coinbase’s own submissions make clear, considering the various paths it suggests is a necessarily complicated endeavor," the SEC filing said. "Yet Coinbase filed its rulemaking petition fewer than ten months ago, supplemented aspects of the petition fewer than three months ago, and sought to supplement the record again only weeks ago."

The regulator announced that the SEC has been inundated with a staggering 1,600 "form-letter comments" along with a modest count of eight original comments. Notably, Coinbase, the renowned cryptocurrency exchange, contributed three of the latter, showcasing their active engagement in the regulatory process.

The federal securities regulator further emphasized that the exploration of new rules or modifications to existing regulations does not impede its ability to enforce the current regulations in place.

"Coinbase attempts an end run around the clear precedent foreclosing relief in these circumstances by arguing that all the Commission needs to do is memorialize its denial of Coinbase’s petition – a decision Coinbase incorrectly asserts has already been made," the SEC said. "But it is undisputed that there has not been any final agency action on its petition, and Coinbase’s argument is largely premised on the erroneous view that recent Commission enforcement actions indicate a Commission decision not to engage in rulemaking."

Source Coindesk