Coinbase has filed a closing brief with the US Court of Appeals for the Third Circuit on May 31, challenging the SEC’s denial of its rulemaking petition. At the heart of the case is a single sentence in the SEC’s order that simply "disagreed" with Coinbase's assertion that current SEC rules are impractical for digital asset firms.

Coinbase argues that this lack of substantive reasoning should lead to the vacation of the SEC’s order. Additionally, Coinbase is seeking a court mandate for the SEC to undertake rulemaking specifically tailored to the crypto industry.

Paul Grewal, Coinbase's Chief Legal Officer, emphasized the significance of this legal battle on social media and criticized the SEC for failing to provide substantive justification for its disagreement. He stated:

"The SEC’s order must be vacated based on this fundamental issue alone."

Grewal underscored broader concerns regarding the SEC's jurisdictional reach without explicit congressional authorization and its failure to establish clear regulatory frameworks for the rapidly expanding digital asset sector.

He further accused the SEC of attempting to stifle innovation within the digital asset industry by refusing to issue necessary rules despite industry requests.

Coinbase's legal brief argues that the SEC’s failure to engage in comprehensive rulemaking violates the Administrative Procedure Act (APA), which mandates agencies to engage in rulemaking for significant policy changes.

The brief asserts that the SEC's approach to digital assets has been inconsistent and lacking in clear legal standards, leading to confusion and compliance challenges for industry participants.

Coinbase contends that the SEC's current regulatory stance effectively renders the digital asset industry non-compliant with existing rules, creating an untenable situation.

This legal challenge has attracted considerable attention from both the crypto community and regulatory experts, as its outcome could profoundly impact the future regulatory landscape for digital assets in the United States.