The U.S. Court of Appeals questioned the Securities and Exchange Commission’s (SEC) regulatory approach to cryptocurrencies on January 13, revealing major legal and procedural issues in the industry.

In a series of social media posts, Gemini Chief Legal Officer, Tyler Meade referenced the case Coinbase Inc. v. SEC, where the court criticized the agency for its terse denial of Coinbase’s request for clearer digital asset regulations.

Judicial Scrutiny of Crypto Enforcement Strategies

According to Meade, Judge Stephanos Bibas of the Third Circuit pinpointed the SEC’s decision as arbitrary and capricious, noting the agency’s failure to provide a comprehensive rationale for its denial of Coinbase’s petition.

“The SEC denied Coinbase’s rulemaking petition. In a single paragraph, it explained that it disagreed with the petition’s concerns; that it had higher-priority agenda items—namely, everything else it was doing,” the ruling states.

In his concurring opinion, Judge Bibas raised concerns about due process, noting the SEC’s enforcement strategy lacked transparency and failed to offer crypto companies clear compliance guidelines.

“The SEC repeatedly sues crypto companies for not complying with the law, yet it will not tell them how to comply. That caginess creates a serious constitutional problem; due process guarantees fair notice,” he wrote in the Third Circuit Court of Appeals decision.

“The SEC has sidestepped the rulemaking process by pursuing a de facto ban through enforcement instead,” wrote Judge Bibas.

“One might wonder if an agency whose mission is maintaining fair, orderly, and efficient markets is authorized to ban an emerging technology,” he added.

SEC and Binance Propose 60-Day Legal Hold Amid Review

The SEC and Binance have jointly requested a 60-day pause in their ongoing legal proceedings.

Filed on February 10, the motion presented to the U.S. District Court for the District of Columbia suggested that the recently formed Crypto Task Force’s review could facilitate a potential resolution of the case.

Throughout this 60-day period, all legal actions will be suspended, meaning no new filings or motions will be introduced.

This pause is intended to allow the task force to conduct its review without the complications of ongoing litigation.

The ongoing legal debate and reevaluation of regulatory tactics may signal a turning point for the cryptocurrency sector.

The court’s criticism of the SEC’s enforcement methods—along with the new 60-day legal hold and task force review—could prompt a shift toward clearer compliance protocols.

As these processes evolve, investors and industry insiders might reflect on how adjusted risk management strategies and operational frameworks in digital asset trading will shape the market’s future.

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