Coinbase Files News FOIA Requests Against Crypto Regulators

Coinbase has filed two Freedom of Information Act (FOIA) requests against American regulators.

The crypto exchange is demanding the release of documents related to US banks’ prosecutions of crypto companies. This was reported by Coinbase CLO Paul Grewal.

“As part of our ongoing efforts to gain full clarity on how regulators approach digital assets, we have filed two new sets of FOIA requests. In short, unless the government gives up, Coinbase will not give up either.”

The Federal Deposit Insurance Corporation (FDIC) has recommended that banks limit deposits from crypto companies to 15% of total deposits. Coinbase also filed another FOIA request to determine how regulators respond to similar requests.

The FDIC reportedly set these limits without prior public consultation, contrary to the usual practice of U.S. banking regulators. Grewal noted that the new FOIA requests are unrelated to previous requests made more than a year ago that are now in federal litigation.

“Each is separate from our FOIA filings from more than a year ago, which are now the subject of federal lawsuits.”

FOIA in the US grants the right to request access to records and information held by federal agencies. This includes government records regarding financial transactions and cryptocurrency regulations.

What is known about the Coinbase lawsuit series

Coinbase has been pressuring the U.S. Securities and Exchange Commission (SEC) for the past few years to develop clear rules for the industry. The company petitioned the Commission in this direction in July 2022 and applied to the court in April 2023.

SEC chairman Gary Gensler rejected Coinbase’s claims, saying existing laws apply to the industry. In March, the platform asked the appeals court to force the regulator to develop rules.

In June 2023, the SEC filed charges against Coinbase for allegedly violating securities laws through the company’s staking Ethereum (ETH) offering. Coinbase later requested documentation from the regulator regarding the classification of ETH to determine whether the agency considered it a security or commodity.

“We allege that Coinbase, despite being subject to securities laws, conflated and unlawfully offered the functions of an exchange, broker-dealer, and clearinghouse.”

Gary Gensler, SEC Chairman

Following this issue, Coinbase also filed a lawsuit against the SEC and FDIC for refusing to clarify the situation with the regulation of the cryptocurrency industry.

Financial regulators have used multiple tools at their disposal to cripple the digital asset industry. @SECGov He claimed comprehensive authority but refused to offer any rules, let alone coherent or consistent rules. During @FDICgov He pressured financial institutions to cut…

— paulgrewal.eth (@iampaulgrewal) June 27, 2024

The company filed a FOIA request with authorities. The exchange was particularly interested in materials related to Ethereum 2.0 research and two already closed SEC cases: Enigma MPC and Ether Delta.

However, Coinbase failed, prompting a court order to overturn the SEC’s decision. The form argued that the regulator lacked clear guidance, making it difficult to comply with existing laws in the US.

Coinbase lawyer Eugene Scalia was concerned that the lack of clarity in the SEC’s behavior left the exchange “without a clear path to compliance.”

“I leave this court with less understanding of the SEC’s views on this matter than when I entered.”

Eugene Scalia, attorney for Coinbase

The panel of judges acknowledged that the SEC could prioritize rulemaking, but questioned why crypto regulation hasn’t received the attention it deserves. The case is part of broader tensions between the SEC and the crypto industry; Here, the regulator insists on classifying most crypto tokens as securities under its supervision.

Coinbase and other crypto companies oppose this, arguing that the industry is in a legal gray area and calling for new legislation to regulate digital currencies.

Crypto’s growing influence in the US

As part of its efforts for better crypto regulation, Coinbase has launched Stand With Crypto, a new initiative that includes a political action committee (PAC).

The US elections in November will see a battle between Republican Donald Trump, who wants to make cryptocurrency great again, and Democrat Kamala Harris, whose views on cryptocurrency are more positive than current President Joe Biden’s but still less progressive than Trump’s . Many crypto supporters believe this election could be a defining moment for the industry and are ready to support its candidates financially.

US election prediction. Source: Polimarket

According to CNBC, crypto firms provided nearly half of all corporate contributions this election cycle. The volume of crypto donations for the US presidential election reached nearly $200 million.

Crypto analyst James Delmore emphasized that California remains the center of the crypto industry thanks to its many blockchain companies and that the political situation in the state will be necessary for further development of legislation in this area.