Coinbase and the U.S. Securities Exchange Commission (SEC) are clashing again — but this time, Coinbase is challenging federal regulators.

On April 24, Coinbase filed a legal action through the U.S. Court of Appeals for the Third Circuit to force the SEC to respond to former requests on crypto regulation. The goal of this latest decision is to “compel basic rulemaking” from the SEC regarding crypto policies, according to an official blog post from Coinbase's Chief Legal Officer Paul Grewal. So, what are the specifics of Coinbase’s SEC filing, and will it affect the United States’ crypto industry?

Coinbase’s April 24 filing is formally known as a writ of mandamus, and it’s related to a petition Coinbase sent to the SEC in July 2022. In Coinbase’s prior petition, the company asked the SEC for transparent guidelines and a legal framework for the cryptocurrency industry, but it has yet to hear a response. This new court action forces the SEC to reply to Coinbase’s petition “within a reasonable time” per the Administrative Procedure Act.

Paul Grewal made it clear in Coinbase’s blog article that the company isn’t telling the SEC “how to respond” to its petition in its latest filing. Instead, Coinbase wants a definitive “yes” or “no” response from the SEC on whether it will hear its petition for clear crypto guidelines. If the SEC says “no,” Coinbase could pursue further legal action to ask why the SEC refuses to share this info with the public. However, Grewal says Coinbase is open to dialogue with the SEC, and Coinbase’s CEO Brian Armstrong recently traveled to D.C. to speak with SEC regulators.

Coinbase also backed a free “Stand With Crypto” NFT for crypto community members to show their support for its latest legal action. As of writing, 19,452 people minted a “Stand With Crypto” NFT as a sign of solidarity.

Although the SEC has yet to lay out crypto-specific guidelines per Coinbase’s petition, it has targeted multiple crypto companies and projects in the past few years. Indeed, the primary reason Coinbase sent its petition in the summer of 2022 was due to the SEC’s accusation that nine cryptocurrencies on the exchange were “unregistered securities.” In March 2023, the SEC sent Coinbase a Wells notice, which suggests the SEC is looking into making a formal charge.

The SEC didn’t say which products and services violate its securities laws, but Coinbase mentioned its Earn staking platform and Coinbase Wallet were under scrutiny.

And it’s not just Coinbase that has come under legal scrutiny from the SEC. Rival crypto exchange Kraken paid the SEC $30 million to settle a charge against its crypto staking service. The SEC also charged the crypto platform Bittrex with operating an “unregistered exchange.”

Despite these high-profile accusations against crypto companies, SEC Chairman Gary Gensler didn’t answer whether Ethereum’s Ether coin (ETH) was a security or a commodity at a recent hearing before the House Financial Services Committee. Although New York Attorney General Letitia James claimed ETH is a security, members of the U.S. Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam maintains ETH is a commodity.

Since the SEC doesn’t have to respond to Coinbase’s petition by a clear deadline, it’s hard to say whether this will lead to significant changes in U.S. crypto regulation. If the SEC responds “yes,” it could lead to actionable crypto policies. On the other hand, a “no” from the SEC would give Coinbase a legal standing to take the SEC to court for a formal hearing. A non-response from the SEC would maintain the confusing status quo for crypto regulation in the U.S.

Although Coinbase’s petition puts extra pressure on the SEC, it’s difficult to say whether the SEC’s leaders will cooperate. However, since the SEC has an ongoing case alleging Ripple’s XRP cryptocurrency is a security, it may wait till the results of this trial to respond to Coinbase’s request. Whether the SEC or Ripple wins the trial could set a precedent for crypto assets in the U.S.

However, one thing that’s clear is more crypto companies in the U.S. are getting frustrated with the SEC’s enforcement and lack of guidelines for Web3. In another Coinbase blog post, the company openly praised the European Union’s recent Markets in Crypto-Assets (MiCA) policy, suggesting the E.U. is leading the way in providing crypto companies with an actionable legal framework. As a consequence of this, more U.S. crypto projects may relocate to jurisdictions with a more favorable crypto climate. For example, Brian Armstrong suggested moving Coinbase’s headquarters to the U.K., and the American exchange Gemini just opened a crypto derivatives exchange outside of the U.S. market.

The longer the SEC remains silent on crypto regulation, the more the U.S. stands to lose in terms of crypto innovation and mainstream Web3 adoption.