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No. 23-1779
IN THE UNITED STATES COURT OF APPEALSFOR THE THIRD CIRCUITIn re Coinbase, Inc., Petitioner
On Petition for a Writ of Mandamus to the
Securities and Exchange Commission
BRIEF FOR RESPONDENTSECURITIES AND EXCHANGE COMMISSIONMEGAN BARBERO
General Counsel

DAVID D. LISITZA
Senior Appellate Counsel

MICHAEL A. CONLEY
Solicitor

DANIEL T. YOUNG
Appellate Counsel

TRACEY A. HARDIN
Assistant General Counsel

Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
202-551-5015 (Lisitza)
lisitzad@SEC.gov

Counsel for Respondent Securities and Exchange Commission

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TABLE OF CONTENTSTABLE OF AUTHORITIES ................................................................................... iii
INTRODUCTION .....................................................................................................1JURISDICTIONAL STATEMENT ..........................................................................2
BACKGROUND .......................................................................................................3
REASONS FOR DENYING THE PETITION .........................................................6I.

Coinbase is not entitled to the extraordinary relief it seeks. .............................8II.

Coinbase’s contention that the Commission is unreasonably
withholding a decision already made is meritless. .........................................18

CONCLUSION ........................................................................................................26
CERTIFICATES

ii

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TABLE OF AUTHORITIES
Cases
Cnty. of Butler v. Governor of Pa.,
8 F.4th 226 (3d Cir. 2021) ................................................................................. 19
Cobell v. Norton,
240 F.3d 1081 (D.C. Cir. 2001) ........................................................................ 12
Cutler v. Hayes,
818 F.2d 879 (D.C. Cir. 1987) .............................................................. 10, 13, 14
Grand Canyon Air Tour Coal. v. FAA,
154 F.3d 455 (D.C. Cir. 1998) .................................................................... 11, 12
Her Majesty the Queen in Right of Ontario v. EPA,
912 F.2d 1525 (D.C. Cir. 1990) ........................................................................ 12
In re Am. Rivers & Idaho Rivers United,
372 F.3d 413 (D.C. Cir. 2004) .......................................................................... 12
In re Barr Lab’ys, Inc.,
930 F.2d 72 (D.C. Cir. 1991) ............................................................................ 16
In re Cal. Power Exch. Corp.,
245 F.3d 1110 (9th Cir. 2001) ............................................................................ 8
In re Cheney,
406 F.3d 723 (D.C. Cir. 2005) ............................................................................. 6
In re Core Commc’ns, Inc.,
531 F.3d 849 (D.C. Cir. 2008) ...................................................................... 6, 12
In re Int’l Chem. Workers Union,
958 F.2d 1144 (D.C. Cir. 1992) ......................................................................... 13
In re Monroe Commc’ns Corp.,
840 F.2d 942 (D.C. Cir. 1988) .................................................................... 12, 19iii

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In re Pesticide Action Network N. Am.,798 F.3d 809 (9th Cir. 2015) .............................................................................. 8
In re Pub. Emps. for Env’t Resp.,
957 F.3d 267 (D.C. Cir. 2020) .................................................................... 12, 16
In re United Mine Workers of Am. Int’l Union,
190 F.3d 545 (D.C. Cir. 1999) .......................................................................... 12
Kerr v. U.S. Dist. Ct. for N. Dist. of Cal.,426 U.S. 394 (1976) ............................................................................................ 8
McClatchy Newspapers, Inc. v. NLRB,131 F.3d 1026 (D.C. Cir. 1997) ........................................................................ 21
MCI Telecomms. Corp. v. FCC,
627 F.2d 322 (D.C. Cir. 1980) .......................................................................... 10
Mexichem Specialty Resins, Inc. v. EPA,
787 F.3d 544 (D.C. Cir. 2015) .......................................................................... 10
Nader v. FCC,
520 F.2d 182 (D.C. Cir. 1975) ........................................................................... 12
Natural Resources Defense Council, Inc. v. SEC,
606 F.2d 1031 (D.C. Cir. 1979) .................................................................. 22, 23
NLRB v. Bell Aerospace Co. Div. of Textron, Inc.,
416 U.S. 267 (1974) .................................................................................... 21, 22
Norton v. S. Utah Wilderness All.,
542 U.S. 55 (2004) ............................................................................................ 20
Oil, Chem. & Atomic Workers Int’l Union v. Zegeer,
768 F.2d 1480 (D.C. Cir. 1985) ........................................................................ 12
Oil, Chem. & Atomic Workers Union v. OSHA,
145 F.3d 120 (3d Cir. 1998) ............................................................ 2, 3, 7, 10, 11
Potomac Elec. Power Co. v. ICC,
702 F.2d 1026 (D.C. Cir. 1983) ........................................................................ 12iv

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Potomac Elec. Power Co. v. ICC,
705 F.2d 1343 (D.C. Cir. 1983) ........................................................................ 12
Prometheus Radio Project v. FCC,
824 F.3d 33 (3d Cir. 2016) ................................................................................ 11
Pub. Citizen Health Rsch. Grp. v. Auchter,
702 F.2d 1150 (D.C. Cir. 1983) ......................................................................... 10
Pub. Citizen Health Rsch. Grp. v. Brock,823 F.2d 626 (D.C. Cir. 1987) .......................................................................... 12
Pub. Citizen Health Rsch. Grp. v. Chao,
314 F.3d 143 (3d Cir. 2002) ........................................................................ 11, 13
Pub. Citizen v. Heckler,
602 F. Supp. 611 (D.D.C. 1985) ................................................................. 13, 14
SEC v. Ripple Labs, Inc.,
No. 20-cv-10832 (S.D.N.Y.) ............................................................................. 14
SEC v. Wahi,
No. 22-cv-1009 (W.D. Wash.) .......................................................................... 14
Shalala v. Guernsey Mem’l Hosp.,
514 U.S. 87 (1995) ............................................................................................ 22
Telecomms. Rsch. & Action Ctr. v. FCC,
750 F.2d 70 (D.C. Cir. 1984) (“TRAC”) ................................................... 3, 6, 12
Transp. Div. of the Int’l Ass’n of Sheet Metal, Air, Rail & Transp.
Workers v. Fed. R.R. Admin., 10 F.4th 869 (D.C. Cir. 2021) ........................... 21
Statutes
Administrative Procedure Act, 5 U.S.C. 551, et seq
5 U.S.C. 552b .................................................................................................... 19
5 U.S.C. 553(e) ................................................................................................... 3v

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Securities Act of 1933, 15 U.S.C. 77a, et seq.
Section 19(a), 15 U.S.C. 77s(a) ........................................................................... 3
Securities Exchange Act of 1934, 15 U.S.C. 78a, et seq.
Section 3(b), 15 U.S.C. 78c(b) ............................................................................ 3
Section 4A, 15 U.S.C. 78d-1 ............................................................................ 19
Section 23(a), 15 U.S.C. 78w(a) ......................................................................... 3
Section 25(a)(1), 15 U.S.C. 78y(a)(1) ................................................................ 2
Trust Indenture Act of 1939, 15 U.S.C. 77aaa, et seq.
Section 319(a), 15 U.S.C. 77sss(a) ...................................................................... 3
Section 319(b), 15 U.S.C. 77sss(b) ..................................................................... 3
Investment Company Act of 1940, 15 U.S.C. 80a-1, et seq.
Section 38(a), 15 U.S.C. 80a-37(a)...................................................................... 3
Section 39, 15 U.S.C. 80a-38 .............................................................................. 3
Investment Advisers Act of 1940, 15 U.S.C. 80b-1, et seq.
Section 211(a), 15 U.S.C. 80b-11(a) ................................................................... 3
Section 211(b), 15 U.S.C. 80b-11(b) .................................................................. 3
42 U.S.C. 7671a(c)(3) .............................................................................................. 942 U.S.C. 7671e(b) .................................................................................................. 942 U.S.C. 7671j(e) ................................................................................................... 949 U.S.C. 106(f)(3)(A) ............................................................................................. 9
Regulations
17 C.F.R. 200.10 .................................................................................................... 19
17 C.F.R. 200.7354(d)(2)(ii)(A) ............................................................................ 20
17 C.F.R. 201.192(a) ................................................................................ 3, 4, 19, 20viCase: 23-1779

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Commission Releases
Report of Investigation Pursuant to Section 21(a) of the Securities
Exchange Act of 1934: The DAO,
Release No. 81207, 2017 WL 7184670 (July 25, 2017) .................................... 24
Arca U.S. Treasury Fund,
Release No. 34026, 2020 WL 5746893 (Sept. 24, 2020) ................................. 24
In re Arca U.S. Treasury Fund,
Release No. 34055, 2020 WL 6157838 (Oct. 20, 2020) ................................... 24
Custody of Digital Asset Securities by Special Purpose Broker-Dealers,
86 Fed. Reg. 11627 (Feb. 26, 2021) ................................................................. 24
BOX Exchange Order,
Release No. 94092, 2022 WL 294298 (Jan. 27, 2022) ...................................... 25
Regulation Best Execution,
88 Fed. Reg. 5440 (proposed Jan. 27, 2023) .......................................... 6, 18, 25
Regulatory Flexibility Agenda,
88 Fed. Reg. 11376 (Feb. 22, 2023) ................................................................. 16
Safeguarding Advisory Client Assets,
88 Fed. Reg. 14672 (proposed Mar. 9, 2023) ................................................... 18
Cybersecurity Risk Management Rule,
88 Fed. Reg. 20212 (proposed Apr. 5, 2023) .................................................... 17
Regulation Systems Compliance and Integrity,
88 Fed. Reg. 23146 (proposed Apr. 14, 2023) .................................................. 17
Supplemental Information and Reopening of Comment Period for Amendments
to Exchange Act Rule 3b-16 Regarding the Definition of “Exchange,”
Exchange Act Release No. 97309, 2023 WL 3173141 (Apr. 14, 2023) ............ 17vii

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Other Authorities
2022 SEC Agency Fin. Rep. 132,https://www.sec.gov/files/sec-2022-agency-financial-report.pdf ...................... 16
Coinbase Comment Letter on Petition for Rulemaking on Digital Asset
Securities Regulation (May 3, 2023),
https://www.sec.gov/comments/4-789/4789-184339-337942.pdf .................. 6, 9
Coinbase Comment Letter on Safeguarding Advisory Client Assets,
Proposed Rule 223-1 (May 8, 2023),
https://www.sec.gov/comments/s7-04-23/s70423-189159-371082.pdf ............ 18
Comments on Petition for Rulemaking on Digital Asset Securities Regulation,
Meetings with SEC Officials, SEC.gov, https://www.sec.gov/comments/
4-789/4-789.htm#meetings (last modified May 4, 2023) .................................... 6
Comments on Petition for Rulemaking on Digital Asset Securities Regulation,
Submitted Comments, SEC.gov, https://www.sec.gov/comments/4-789/
4-789.htm (last modified May 4, 2023) ............................................................... 5
Framework for “Investment Contract” Analysis of Digital Assets,
https://www.sec.gov/corpfin/framework-investment-contract-analysisdigital-assets (last modified March 8, 2023) ..................................................... 25
Gary Gensler, Chair, SEC, Prepared Remarks on Crypto Markets
at the Penn Law Capital Markets Association Annual Conference(Apr. 4, 2022), https://www.sec.gov/news/speech/gensler-remarks-cryptomarkets-040422 . ................................................................................................ 20
Louis Loss, Joel Seligman & Troy Paredes, Fundamentals of Securities
Regulation 13.E (6th ed. 2022) ............................................................................ 3
Press Release, SEC, SEC Announces Enforcement Results for FY22
(Nov. 15, 2022), https://www.sec.gov/news/press-release/2022-206 ................ 16viiiCase: 23-1779

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Richard J. Pierce, Jr., Administrative Law Treatise § 14.3.1(6th ed. last updated Nov. 2022) ...................................................................16, 17
SEC Staff Accounting Bulletin No. 121, 87 Fed. Reg. 21016(Apr. 11, 2022) ................................................................................................... 25ix

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INTRODUCTION
Mandamus is an extraordinary remedy—one that requires the petitioner toshow a clear and indisputable right to relief. Coinbase does not and cannot
demonstrate such a right. Neither the securities laws nor the Administrative
Procedure Act (“APA”) impose on the Securities and Exchange Commission(“SEC” or “Commission”) an obligation to issue the broad new regulations
regarding “digital assets” Coinbase has requested. Perhaps recognizing this,Coinbase instead asserts that this Court should compel the Commission to act on
Coinbase’s recently filed rulemaking petition. But no statute or regulation requires
the Commission to take such action on a specific timeline. Nor is there any
precedent supporting Coinbase’s request. In these circumstances, Coinbase cannot
meet the high bar for mandamus relief.
The rulemaking petition as to which Coinbase seeks an immediate
determination asks the Commission to take a series of discretionary actions toreplace existing applicable securities laws and regulations with a comprehensive
new regulatory regime for the trading of crypto assets that are securities. As
Coinbase’s own submissions make clear, considering the various paths it suggests
is a necessarily complicated endeavor. Yet Coinbase filed its rulemaking petition
fewer than ten months ago, supplemented aspects of the petition fewer than threemonths ago, and sought to supplement the record again only weeks ago.
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Coinbase nonetheless claims that mandamus is appropriate because—in its
telling—the Commission has secretly decided to deny the petition but is refusing tosay so to avoid judicial review. This claim is baseless. The Commission continues
to consider Coinbase’s petition in the ordinary course. Coinbase is also incorrectthat the Commission’s enforcement of existing legal requirements predetermines
any decision whether to engage in rulemaking. Agencies routinely enforce
existing rules while considering further amendments to regulatory requirements.
Moreover, the Commission’s ongoing regulatory efforts regarding crypto assetsthat are securities or offered and sold as such—including the solicitation ofcomments from the public across numerous fronts—belie the assertion ofclosed-mindedness on which Coinbase’s petition depends. Coinbase’s preference
for faster or different regulatory action by the Commission does not entitle it to
extraordinary relief from this Court.
The petition should be denied.
JURISDICTIONAL STATEMENT
Section 25(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)
provides that all “final order[s]” of the Commission are subject to the exclusive
jurisdiction of the court of appeals. 15 U.S.C. 78y(a)(1). “[W]here administrative
enabling statutes … grant exclusive jurisdiction to a particular court to review pastactions of an agency, that court necessarily has the exclusive jurisdiction to review
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inaction as well.” Oil, Chem. & Atomic Workers Union v. OSHA, 145 F.3d 120,
123 (3d Cir. 1998) (citing Telecomms. Rsch. & Action Ctr. v. FCC, 750 F.2d 70, 75(D.C Cir. 1984) (“TRAC”)).
BACKGROUND
1. “Each of the basic [securities] statutes authorizes the Commission to
adopt whatever rules and regulations may be necessary to carry out its statutoryfunctions.” Louis Loss, Joel Seligman & Troy Paredes, Fundamentals of
Securities Regulation 13.E (6th ed. 2022).1 While Congress thus provided theCommission with broad rulemaking authority, it did not—unlike in some otherstatutory schemes—expressly address rulemaking petitions. The APA, however,generally allows members of the public to petition an agency to promulgate,amend, or repeal rules. See 5 U.S.C. 553(e). And under the Commission’s Rulesof Practice, “[a]ny person desiring the issuance, amendment or repeal of a rule ofgeneral application may file a petition therefor with the Secretary.” 17 C.F.R.
201.192(a). The Secretary is directed to acknowledge receipt of the petition and“refer it to the appropriate division or office for consideration and

1

See Section 19(a) of the Securities Act of 1933, 15 U.S.C. 77s(a);Sections 3(b) and 23(a) of the Exchange Act, 15 U.S.C. 78c(b), 78w(a);Sections 319(a) and (b) of the Trust Indenture Act of 1939, 15 U.S.C. 77sss(a), (b);Sections 38(a) and 39 of the Investment Company Act of 1940, 15 U.S.C.
80a-37(a), 80a-38; Sections 211(a) and (b) of the Investment Advisers Act of 1940,
15 U.S.C. 80b-11(a), (b).
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recommendation. Such recommendations shall be transmitted with the petition to
the Commission for such action as the Commission deems appropriate.” Id. The
Rules do not set a deadline for responding to petitions.
2. Coinbase filed its petition in July 2022, “requesting that the Commission
propose and adopt rules to govern the regulation of securities that are offered andtraded via digitally native methods, including potential rules to identify which
digital assets are securities.” Add. 2–33.2 The petition seeks Commission action
addressing a wide variety of topics that bear on each of the principal securities
Acts, including:2Standards for the classification of crypto assets as securities(Add. 8–13);



Requirements for the issuance of crypto asset securities (Add. 13–16);



Disclosure obligations of crypto asset securities issuers (Add. 16–18);



Standards and registration requirements for trading crypto assets onnational securities exchanges (Add. 18–21);



Custody of crypto assets (Add. 21–23);



Broker-dealers who effect transactions in crypto asset securities(Add. 23–26);

Transfer agents who record changes in ownership of crypto asset
securities (Add. 26–27); and“Add.” refers to the addendum filed by Coinbase alongside its petition for
mandamus (ECF No. 1-1). For purposes of this brief, the Commission does notdistinguish between the terms “digital asset” and “crypto asset.”4

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Clearing-agency status as applied to blockchains (Add. 27–29).

The petition does not include detailed rule proposals or draft rule text.
Instead, it requests that the Commission answer 50 “[k]ey” and “detailed”
questions (Add. 5, 8) as part of overhauling the existing regulatory regime thatgoverns the “offer, sale, trading, custody, and clearing” of securities (Add. 2).
Coinbase’s 50 questions, in turn, contain 60 separately delineated subquestions.
And, for each, Coinbase suggests a variety of possible Commission actions,
including convening public roundtables, issuing requests for comment, issuingconcept releases, engaging in eventual rulemaking, granting exemptive relief, or
taking no-action positions. Add. 4, 9, 29.
After Coinbase submitted its petition, the Commission’s Office of theSecretary opened a file (No. 4-789) and began accepting public comments.3 To
date, the Commission has received 1,683 form-letter comments and eight othercomments, three of which have come from Coinbase itself. More specifically,
Coinbase provided extensive additional comments on December 6, 2022 (Add.
34–44) (11 pages proposing a framework for registration and reporting by crypto
asset issuers), March 20, 2023 (Add. 45–62) (18 pages discussing crypto assets and3

See Comments on Petition for Rulemaking on Digital Asset Securities
Regulation, Submitted Comments, SEC.gov, https://www.sec.gov/comments/4789/4-789.htm (last modified May 4, 2023).
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Date Filed: 05/15/2023“staking”), and—after this mandamus petition was filed—on May 3, 2023
(discussing Coinbase’s comment on the Commission’s proposed revisions toRegulation Best Execution).4 Coinbase has also participated in dozens of meetings
to discuss its petition, including—by its own telling—“more than 30 meetings in
the past year” (Pet. 14).5
REASONS FOR DENYING THE PETITION
The “central question in evaluating” Coinbase’s claim “is ‘whether theagency’s delay is so egregious as to warrant mandamus.’” In re Core Commc’ns,
Inc., 531 F.3d 849, 855 (D.C. Cir. 2008) (quoting TRAC, 750 F.2d at 79). To
obtain the “drastic” remedy of mandamus—which is “available only inextraordinary situations”—a petitioner “must have a clear and indisputable right torelief; and even if [it] overcomes all the[] hurdles, whether mandamus relief should
issue is discretionary.” In re Cheney, 406 F.3d 723, 729 (D.C. Cir. 2005) (en banc)(internal quotation marks omitted).

4

Coinbase Comment Letter on Petition for Rulemaking on Digital Asset
Securities Regulation (May 3, 2023), https://www.sec.gov/comments/4-789/4789184339-337942.pdf; see also Regulation Best Execution, 88 Fed. Reg. 5440
(proposed Jan. 27, 2023).
5

See also Comments on Petition for Rulemaking on Digital Asset Securities
Regulation, Meetings with SEC Officials, SEC.gov, https://www.sec.gov/
comments/4-789/4-789.htm#meetings (last modified May 4, 2023).
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Coinbase has identified no such egregious delay warranting theextraordinary relief it seeks from this Court. Mere months have passed since
Coinbase’s petition was filed and even less time has elapsed since Coinbase
supplemented the record. There are no statutory or regulatory deadlines requiring
the Commission to take action on the petition on a specific timeline, and Coinbase
cannot persuasively claim any cognizable harm from the fact that the Commission
has not acted on the petition during the short time it has been pending. See Oil,Chem. & Atomic Workers Union, 145 F.3d at 122–23.
Coinbase attempts an end run around the clear precedent foreclosing relief inthese 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. But it is undisputed that there has not been any final agency
action on its petition, and Coinbase’s argument is largely premised on theerroneous view that recent Commission enforcement actions indicate aCommission decision not to engage in rulemaking. But the Commission can—andoften does—enforce existing legal requirements while also considering further
amendments to those requirements. Nor does pursuing that path thwart judicial
review; enforcement actions proceed in district court and provide the parties andpotential amici with the opportunity to pursue any arguments that existing
provisions should not be applied to crypto assets that are securities.
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Coinbase is not entitled to the extraordinary relief it seeks.
“The remedy of mandamus is a drastic one, to be invoked only inextraordinary situations.” Kerr v. U.S. Dist. Ct. for N. Dist. of Cal., 426 U.S. 394,
402 (1976). The party seeking a writ of mandamus bears the burden of provingthat its right to issuance of the writ is “clear and indisputable.” Id. at 403 (internal
quotation marks omitted). Neither the securities laws nor the Commission’s Rulesof Practice establish a deadline for responding to petitions for rulemaking. And thetiming here—a matter of mere months since Coinbase filed its rulemaking
petition—is well within the bounds of reasonableness. There is no support inprecedent for requiring the Commission to act on the timeline Coinbase seeks toimpose.
This is not one of “those rare instances when the agency’s delay is‘egregious,’” warranting mandamus. In re Pesticide Action Network N. Am.,798 F.3d 809, 813 (9th Cir. 2015) (quoting In re Cal. Power Exch. Corp., 245 F.3d
1110, 1124 (9th Cir. 2001)). Deliberating over the kind of significant changes
sought by Coinbase, which could affect both crypto assets and the securities
markets more generally, takes time—including, as here, time to weigh whether or
not to initiate a rulemaking proceeding about such topics in the first instance. Thisis particularly true given the Commission’s active regulatory and enforcement
agenda in this area (see infra 17–18, 24–25, 14), as these efforts may yield
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information useful in the Commission’s consideration of the issues raised in
Coinbase’s petition.
Indeed, Coinbase is still actively engaged in supplementing the record on its
petition for rulemaking—belying its assertion that the Commission has
unreasonably delayed in deciding it. Not even ten months have passed since
Coinbase initially filed its broad rulemaking petition, which seeks a wide range ofrulemaking activity involving many statutory and existing regulatory provisions.
Several months later—in December 2022—Coinbase refined and supplemented its
petition regarding how to regulate investment contracts involving crypto assets.
See Add. 34–44. On March 20, 2023, Coinbase made an additional submission
relating to staking services and blockchains—a topic not covered in its initial
petition at all. See Add. 45–62. And, finally, it further supplemented the record
just two weeks ago to address its concerns regarding Regulation Best Execution.
See Coinbase Comment Letter (May 3, 2023), supra 6 n.4.
There is no provision in the securities laws mandating that the Commission
adopt rules such as those suggested by Coinbase, much less a statutory deadline bywhich it must do so.6 Coinbase thus asks this Court to impose an artificially

6Compare 42 U.S.C. 7671a(c)(3), 7671e(b), 7671j(e) (prescribing deadlines
for the Environmental Protection Agency to act on rulemaking petitions under the
Clean Air Act); 49 U.S.C. 106(f)(3)(A) (specifying deadlines for the Federal
Aviation Administration to act on rulemaking petitions).
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constrained timeline on the Commission’s discretionary rulemaking agenda. But“[a]bsent a precise statutory timetable or other factors counseling expeditious
action, an agency’s control over the timetable of its proceedings is entitled toconsiderable deference.” Mexichem Specialty Resins, Inc. v. EPA, 787 F.3d 544,
555 (D.C. Cir. 2015) (internal quotation marks omitted); see also Cutler v. Hayes,
818 F.2d 879, 897 (D.C. Cir. 1987) (reasonableness of delay “must be judged in
the context of the statute which authorizes the agency’s action” and this “entails an
examination of any legislative mandate in the statute and the degree of discretion
given the agency by Congress”) (internal quotation marks omitted).7
Nor is there any support in this Court’s cases for the issuance of a writ
requiring more accelerated action. In Oil, Chemical & Atomic Workers Union, forexample, this Court found no undue delay where mandamus was sought five years
after a petition was filed and three years after the agency’s self-imposed deadline
to act. 145 F.3d at 122. As the Court explained, the petition “would have us

7

The securities laws are not analogous to other statutory schemes that courts
have found to imply a need for expeditious action. Cf. MCI Telecomms. Corp. v.
FCC, 627 F.2d 322, 340 (D.C. Cir. 1980) (“[T]he entire ratemaking procedure in
the 1934 Communications Act … assumes that rates will be finally decided withina reasonable time encompassing months, occasionally a year or two, but not
several years or a decade.”); Pub. Citizen Health Rsch. Grp. v. Auchter, 702 F.2d
1150, 1153–54, 1153 n.10 (D.C. Cir. 1983) (per curiam) (holding that an agency’s
more than three-year delay in commencing a rulemaking was unreasonable where
underlying statute instructed that “the Secretary shall give due regard to theurgency of the need for [worker safety standards]”).
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intrude into the quintessential discretion of the Secretary” to “allocate[Occupational Safety and Health Administration’s (“OSHA”)] resources and set its
priorities.” Id. at 123. And it noted that the agency had gathered a “wealth ofdata” that it was in the process of analyzing. Given the difficulty of the task, theagency’s expertise, and the competing demands on the agency’s resources, “thisCourt [was] not in a position to tell the Secretary how to do her job.” Id. at 124.
Rather, it was not until a subsequent case argued “nine years after OSHA
initially announced its intention to begin the rulemaking process,” where “OSHA’s
counsel admitted the possibility that OSHA might not promulgate a rule foranother ten or twenty years, if at all,” that the Court found relief appropriate. Pub.
Citizen Health Rsch. Grp. v. Chao, 314 F.3d 143, 145 (3d Cir. 2002). Similarly,
Prometheus Radio Project v. FCC, 824 F.3d 33 (3d Cir. 2016), addressed a
12-year delay by the Federal Communications Commission in revising certain
rules, despite a statute requiring review of the rules every four years. Id. at 48,
50–51. And even in that circumstance, the Court pointed to the presence ofadditional factors such as multiple prior judicial decisions finding the agency delay
unreasonable and ordering the FCC to act.
Precedent in other circuits does not support mandamus in thesecircumstances either. Indeed, courts have found much longer delays reasonable.
See, e.g., Grand Canyon Air Tour Coal v. FAA, 154 F.3d 455, 477–78 (D.C. Cir.
11

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1998) (declining to intervene notwithstanding a 10-year delay in issuing a rule and20-year delay to achieve the rule’s statutory objective); Her Majesty the Queen in
Right of Ontario v. EPA, 912 F.2d 1525, 1534 (D.C. Cir. 1990) (delay of “morethan nine years” not unreasonable); In re Monroe Commc’ns Corp., 840 F.2d 942,
945–47 (D.C. Cir. 1988) (delay of several years did not warrant mandamus);
TRAC, 750 F.2d at 80–81 (delays of two and five years did not warrant
mandamus); Oil, Chem. & Atomic Workers Int’l Union v. Zegeer, 768 F.2d 1480,
1487–88 (D.C. Cir. 1985) (dismissing mandamus petition upon showing, after fiveyear-delay, that agency would complete rulemaking within two years).88

Likewise, cases in which courts have ordered mandamus relief involve
periods much lengthier than the one here. See In re Pub. Emps. for Env’t Resp.,
957 F.3d 267, 273 (D.C. Cir. 2020) (“For nineteen years, the agencies have failed
to comply with their statutory mandate.”); In re Core, 531 F.3d at 857 (six-year
delay in issuing a justification for a rule after the rule was remanded without
vacatur); In re Am. Rivers & Idaho Rivers United, 372 F.3d 413, 419–20 (D.C. Cir.
2004) (delay of six-plus years was unreasonable); In re United Mine Workers of
Am. Int’l Union, 190 F.3d 545, 551–54 (D.C. Cir. 1999) (noting that the court
ordered an agency to produce timetable for promulgating final rule after aneight-year delay); Pub. Citizen Health Rsch. Grp. v. Brock, 823 F.2d 626, 629(D.C. Cir. 1987) (per curiam) (A five-year delay in promulgating a final rule“treads at the very lip of the abyss of unreasonable delay.”); Cobell v. Norton, 240
F.3d 1081, 1095–97 (D.C. Cir. 2001) (holding that even though statute did not set
specific deadlines, agency unreasonably delayed addressing plaintiff’s rights byfailing to discharge its legally obligatory duties for more than six years); Potomac
Elec. Power Co. v. ICC, 702 F.2d 1026, 1033–35 (D.C. Cir. 1983) (requiring
agency to act after ten-year delay), supplemented, 705 F.2d 1343 (D.C. Cir. 1983)(per curiam); Nader v. FCC, 520 F.2d 182, 205–07 (D.C. Cir. 1975) (delay of ten
years was unreasonable).
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Coinbase suggests that it will be harmed because it “cannot adequately
structure [its] businesses and plan for the future” in the absence of new regulation.
Pet. 20. But Coinbase’s assertions regarding a purported lack of guidance are bothincorrect (see infra 17–18, 24–25, describing guidance and regulatory action by theCommission related to crypto assets), and insufficient to justify mandamus.
In assessing whether there is harm from delay, courts often give more weightto threats to health and safety. See Cutler, 818 F.2d at 898 & n.162 (collecting
cases); In re Int’l Chem. Workers Union, 958 F.2d 1144, 1150 (D.C. Cir. 1992)(per curiam) (six-year delay of rulemaking relating to cadmium was “anextraordinarily long time, in light of the admittedly serious health risks associatedwith the current permissible levels of cadmium exposure under the twenty-year-old
standards still in place”); Chao, 314 F.3d at 146 (granting mandamus where
dangers of the chemical to be regulated “include[d] ulceration of the stomach andskin, necrosis, perforation of the nasal septum, asthma, and dermatitis,” as well ascancer). Indeed, in one of the few cases involving a delay of less than a year, thedistrict court pointed to known health risks in ordering the Department of Healthand Human Services to act on a petition involving domestic sales of raw milk. See
Pub. Citizen v. Heckler, 602 F. Supp. 611 (D.D.C. 1985). But even there, thegovernment had been collecting data on the health risks of consuming raw milk for

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a decade and the government had not acted on a related proposed rule for over a
year. Id. at 612.
While purported economic harm will sometimes be sufficient to “justify
court intervention” (Cutler, 818 F.2d at 898 & n.161), there is no such cognizable
harm here. Coinbase does not really claim to be harmed by the ten months thathave elapsed since it filed its petition. See Pet. 20 (“It is not the length of the
SEC’s delay in isolation that renders its inaction here unreasonable.”). Rather,
Coinbase asserts that the delay precludes “judicial scrutiny” of the Commission’s
enforcement approach in this area, with which it disagrees. Pet. 20–21. Contrary
to this assertion, such scrutiny occurs in the very enforcement actions Coinbase
criticizes; any litigant or amicus participating in those cases can raise
disagreements with the Commission’s interpretations of existing securities laws—
including any concerns about notice—in the district courts and on appeal, as
Coinbase itself has repeatedly done. See, e.g., Pet. 11 (citing Brief of Amicus
Curiae Coinbase, Inc. in Support of Defendants Ishan Wahi and Nikhil Wahi’s
Motion to Dismiss, SEC v. Wahi, No. 22-cv-1009 (W.D. Wash. Apr. 3, 2023), ECF
No. 104); Amicus Curiae Brief of Coinbase, Inc. in Support of Defendants’ Fair
Notice Defense, SEC v. Ripple Labs, Inc., No. 20-cv-10832 (S.D.N.Y. Nov. 14,2022), ECF No. 705.
Several additional factors counsel against granting relief.
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First, the acknowledged complexity of Coinbase’s proposals undermines its
request for accelerated relief. Coinbase itself recognizes the enormity of theundertaking its petition contemplates—a complete “rethinking and reframing” ofexisting securities regulation (Add. 8)—and states that the petition implicates the“difficult and complex legal, policy, and technical considerations relating to theapplication of the existing federal securities law regime” to crypto asset securities(Add. 29). See also Add. 30 (regulation of crypto assets raises “complex and novel
issues”); Add. 4 (describing “large, novel, or complicated issues” associated withthe regulation of crypto assets); Add. 5 (recognizing that questions will be“challenging to solve”). Coinbase proposes that the Commission achieve a“paradigm shift” (Add. 2) that fully replaces the “plumbing for financialtransactions” across the national securities market system (Add. 7) by using
rulemaking, requests for comment, exemptive authority, concept releases,
interpretive guidance, no-action relief, advisory committees, and publicroundtables (Add. 4, 9, 29). All the while, the petition requests that theCommission also coordinate with various executive agencies, Congress, othernations, and banking regulators—whose work on crypto assets Coinbase
recognizes “has only just begun.” Add. 2, 29–30.
Second, the Commission has limited resources, which it has appropriately
directed to its robust regulatory and enforcement agenda, among other priorities.
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Date Filed: 05/15/2023“[T]he number of rulemaking activities on the SEC’s regulatory agenda between
spring 2017 and spring 2022 increased overall” and “in only the first 8 months of2022, the SEC proposed 26 new rules, which was more than twice as many newrules as proposed the preceding year and more than it had proposed in each of theprevious 5 years.” 2022 SEC Agency Fin. Rep. 1329; see also Regulatory
Flexibility Agenda, 88 Fed. Reg. 11376 (Feb. 22, 2023) (summarizing the Chair’s
rulemaking priorities). Moreover, the Commission “filed 760 total enforcement
actions in fiscal year 2022, a 9 percent increase over the prior year.” Press
Release, SEC, SEC Announces Enforcement Results for FY22 (Nov. 15, 2022).10
The relief requested in the petition would thus improperly “put the petitioner ‘atthe head of the queue’ while ‘mov[ing] all others back one space.’” In re Pub.
Emps. for Env’t Resp., 957 F.3d at 275 (alteration in original) (quoting In re Barr
Lab’ys, Inc., 930 F.2d 72, 75 (D.C. Cir. 1991)); see also Richard J. Pierce, Jr.,
Administrative Law Treatise § 14.3.1 (6th ed. last updated Nov. 2022) (explainingthat the Court should “focus not on the detail of the agency’s method of proceedingwith respect to the particular matter, but rather on a broad assessment of thetemporal urgency of that matter in comparison with the temporal urgency of the9

Available at https://www.sec.gov/files/sec-2022-agency-financial-report.pdf.

10

Available at https://www.sec.gov/news/press-release/2022-206.
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scores, hundreds, or even thousands of other matters for which the agency has
decisionmaking responsibility”).
Third, as a part of the Commission’s overall regulatory agenda, it is also
pursuing a number of actions that concern crypto assets that are securities. These
include: Supplemental Information and Reopening of Comment Period forAmendments to Exchange Act Rule 3b-16 Regarding the Definition of“Exchange,” Exchange Act Release No. 97309, 2023 WL 3173141(Apr. 14, 2023) (inviting public comment on the application of securities
exchange registration requirements to purportedly decentralized financesystems transacting in crypto asset securities);Regulation Systems Compliance and Integrity, 88 Fed. Reg. 23146,
23166–68 (proposed Apr. 14, 2023) (discussing application of certain rules
to crypto asset securities);Cybersecurity Risk Management Rule, 88 Fed. Reg. 20212, 20278–79(proposed Apr. 5, 2023) (discussing cybersecurity risk related to crypto
assets);17

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Safeguarding Advisory Client Assets, 88 Fed. Reg. 14672, 14688–90(proposed Mar. 9, 2023) (addressing investment advisers’ obligation tosafeguard clients’ crypto asset securities);11 andRegulation Best Execution, 88 Fed. Reg. at 5540–42, 5448–49 (requesting
public comment concerning broker-dealer customer orders for crypto asset
securities).
The information gathered from any or all of these efforts could inform theCommission’s consideration of its regulatory approach in this area, including its
consideration of the regulatory approaches suggested in Coinbase’s petition. The
Commission thus reasonably continues to consider that petition in the context ofthese other initiatives. At this early stage, fewer than ten months after filing andmere weeks after the latest effort to supplement the record, the APA does not
require more.
II.

Coinbase’s contention that the Commission is unreasonably withholding
a decision already made is meritless.
Despite the clear weight of the precedent against it, Coinbase contends thatmandamus is appropriate because the Commission’s conduct here is “per se
unreasonable.” Pet. 16. In its view, the Commission has “already decided

11

See Coinbase Comment Letter on Safeguarding Advisory Client Assets,
Proposed Rule 223-1 (May 8, 2023), https://www.sec.gov/comments/s7-0423/s70423-189159-371082.pdf.
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internally to deny Coinbase’s petition, and is simply withholding a formal decisionfrom Coinbase and the public, with the effect (and perhaps intent) of frustrating
judicial review.” Pet. 5, 16. These assertions are baseless.
As already discussed, the Commission is actively considering its regulatory
approaches in this area, including the paths suggested in Coinbase’s petition. Thisis thus not a case involving “the unusual circumstance of an unrebutted allegationof [government] bad faith.” In re Monroe, 840 F.2d at 946–47. And this Court“generally presume[s] that government officials act in good faith.” Cnty. of Butler
v. Governor of Pa., 8 F.4th 226, 230 (3d Cir. 2021).
In arguing to the contrary, Coinbase points to comments from theCommission’s Chair involving crypto assets. Pet. 2 n.2, 10–11 & nn.15–17, 12–13& nn.21–22. But those comments did not—and could not—constitute agency
action denying Coinbase’s rulemaking petition. The Commission as a body acts,
in relevant respects, through a majority vote of a quorum of its five
Commissioners. See 17 C.F.R. 200.10; 5 U.S.C. 552b (requiring public votes onmost topics); 15 U.S.C. 78d-1 (no authority for “the delegation of the function ofrulemaking”); see also 17 C.F.R. 201.192(a) (providing that the Secretary shall19

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notify petitioner of the Commission’s action on a rulemaking petition).12 And
remarks from one member of the Commission (including the Chair) represent only
the views of that member. 17 C.F.R. 200.735-4(d)(2)(ii)(A); see also, e.g., Gary
Gensler, Chair, SEC, Prepared Remarks on Crypto Markets at the Penn Law
Capital Markets Association Annual Conference (Apr. 4, 2022) (cited at Pet. 13n.22) (“As is customary, I’d like to note that my views are my own, and I’m notspeaking on behalf of the Commission or SEC staff.”).13 There is simply no basis
from which to conclude that such remarks amount to a sub silentio denial of
Coinbase’s petition.
Coinbase also contends that the Commission’s choice to pursue enforcement
actions in this area somehow proves that the Commission “has no intention of
conducting rulemaking.” Pet. 15. But Coinbase’s argument fundamentally
misunderstands agency enforcement and rulemaking, which are not inherently
inconsistent.

12

The Supreme Court has rejected the argument that an agency’s inaction on arulemaking petition is the same as a denial of that petition. See Norton v. S. Utah
Wilderness All., 542 U.S. 55, 63 (2004) (“A ‘failure to act’ is not the same thing asa ‘denial.’ The latter is the agency’s act of saying no to a request; the former issimply the omission of an action without formally rejecting a request—for
example, the failure to promulgate a rule or take some decision by a statutory
deadline.”).
13

Available at https://www.sec.gov/news/speech/gensler-remarks-cryptomarkets-040422.
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First, there is no merit to Coinbase’s suggestion that the Commission could
not pursue both enforcement actions involving crypto asset securities andrulemaking because, according to Coinbase, the initiation of a rulemaking would
represent a concession that current “requirements are insufficiently clear or
workable.” Pet. 17. The Commission could reasonably conclude, for example,
that an actor in the securities industry had violated existing, applicable regulatory
requirements while simultaneously engaging in rulemaking to assess whether there
were reasonable policy justifications for modifying those requirements in the
future.
Second, there is likewise no force to the argument that any enforcement
actions that the Commission brings while Coinbase’s rulemaking petition ispending somehow “transgress[]” the “due process and fair notice” otherwise
provided through rulemaking. Pet. 11. It is well established that “[a]gencies do
not ordinarily have to regulate a particular area all at once” (Transp. Div. of theInt’l Ass’n of Sheet Metal, Air, Rail & Transp. Workers v. Fed. R.R. Admin.,10 F.4th 869, 875 (D.C. Cir. 2021)), and “agencies are entitled, just as courts, toproceed case by case” (McClatchy Newspapers, Inc. v. NLRB, 131 F.3d 1026, 1035
(D.C. Cir. 1997)).
Coinbase’s only cited case on this score (see Pet. 21, citing NLRB v. BellAerospace Co. Div. of Textron, Inc., 416 U.S. 267 (1974)), is not to the contrary.
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While the Supreme Court there stated that “there may be situations where [anagency’s] reliance on adjudication would amount to an abuse of discretion” (BellAerospace, 416 U.S. at 294), it did not find such an abuse in that case. Instead, it
stated that the agency there “ha[d] reason to proceed with caution, developing its
standards in a case-by-case manner with attention to the specific” facts at issue,
and that its “judgment that adjudication best serves this purpose is entitled to great
weight.” Id. And the Supreme Court later cited Bell Aerospace for the proposition
that “[t]he APA does not require that all the specific applications of a rule evolveby further, more precise rules rather than by adjudication.” Shalala v. Guernsey
Mem’l Hosp., 514 U.S. 87, 96 (1995).
Coinbase also overlooks the extent to which case-by-case litigation andrulemaking can beneficially inform one another. The D.C. Circuit addressed thisissue in Natural Resources Defense Council, Inc. v. SEC, 606 F.2d 1031 (D.C. Cir.
1979), where it reversed a district court order holding that the Commission had
acted arbitrarily and capriciously by denying a rulemaking petition. Id. at 1035–
36. The challengers had “petitioned the SEC to promulgate rules requiring
corporate disclosure of environmental and equal employment information.”
Id. at 1036. One of the sought-after rules would have required companies todisclose to shareholders certain employment information already shared with the
Equal Employment Opportunity Commission. The SEC denied this request,
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explaining that if such data were “as significant as the rulemaking petitioners …
contend[ed], then its disclosure [was] already required under existing rules” and“[t]he precise working out of the particular … data disclosure requirements could
be left to case-by-case adjudication under those existing rules.” Id. at 1062. The
D.C. Circuit held that the record, “far from undercutting the reasonableness of thisapproach, demonstrate[d] its potential utility.” Id. As the court put it, “[t]he SEC
may rationally choose to proceed by adjudication for a reasonable period of time,
which will provide it with the experience enabling it to determine at a later datewhether something other than a [current] rule is necessary or desirable.” Id.
Similarly here, judicial determinations made on a case-by-case basis in thecrypto-asset space (in addition to the various rulemakings already underway
involving crypto asset securities) may inform the Commission’s consideration ofother regulatory action, including that suggested in Coinbase’s petition. And
contrary to Coinbase’s claim that the Commission seeks to surreptitiously avoid
judicial scrutiny (see Pet. 21), the Commission has pursued enforcement cases infederal court and litigants are fully capable of testing their views of the securities
laws both in district court and on appeal.

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Moreover, contrary to the contentions of Coinbase and amici,14 theCommission is actively taking regulatory measures beyond enforcement actions.
In addition to the proposed regulations and enforcement actions already discussed,
for example, the Commission has issued an investigative report explaining thatcrypto assets can be offered and sold as securities and by persons who act as asecurities exchange15; issued a no-action statement and request for comment
regarding the custody of crypto asset securities by broker-dealers16; granted an
exemption for an investment company that issued its shares as crypto securities17;
and approved a national securities exchange’s proposal to record and disseminate

14See, e.g., Pet. 15 (The Commission “has demonstrated” through its
enforcement actions “that it has no intention of conducting rulemaking.”); see also
Chamber of Commerce Amicus Br. 10; Crypto Council Amicus Br. 9.
15

Report of Investigation Pursuant to Section 21(a) of the Securities Exchange
Act of 1934: The DAO, Release No. 81207, 2017 WL 7184670 (July 25, 2017).
16

Custody of Digital Asset Securities by Special Purpose Broker-Dealers,
86 Fed. Reg. 11627 (Feb. 26, 2021); see Add. 24–25.
17

Arca U.S. Treasury Fund, Release No. 34026, 2020 WL 5746893 (Sept. 24,
2020); In re Arca U.S. Treasury Fund, Release No. 34055, 2020 WL 6157838(Oct. 20, 2020).
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information regarding orders and executions on a market data feed using a
blockchain system.18***

That Coinbase would like its policy preferences addressed immediately does
not entitle it to extraordinary relief ordering the Commission to act on arulemaking petition that has been pending for well under a year.

18

BOX Exchange Order, Release No. 94092, 2022 WL 294298 (Jan. 27, 2022).
In addition to these Commission-level actions, Commission staff have issued nonbinding, non-precedential guidance regarding crypto asset securities. See, e.g.,
Framework for “Investment Contract” Analysis of Digital Assets,
https://www.sec.gov/corpfin/framework-investment-contract-analysis-digitalassets (last modified March 8, 2023); SEC Staff Accounting Bulletin No. 121, 87
Fed. Reg. 21016 (Apr. 11, 2022); 88 Fed. Reg. at 5448 n.96. See also Add. 10–12,
14, 25–26.
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CONCLUSIONThe Court should deny the petition for mandamus.

Respectfully submitted,
MEGAN BARBERO
General Counsel
MICHAEL A. CONLEY
Solicitor
TRACEY A. HARDIN
Assistant General Counsel/s/ David D. Lisitza
DAVID D. LISITZA
Senior Appellate Counsel
DANIEL T. YOUNG
Appellate Counsel
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
202-551-5015 (Lisitza)
lisitzad@SEC.gov
May 2023

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CERTIFICATES
I hereby certify that:1.

I am an attorney representing a federal government agency. I am also

admitted to the bar of this Court. See 3d Cir. L.A.R. 46.1(e).
2.

This brief complies with applicable type-volume limitations, seeFed. R. App. P. 21(d)(1), because this brief contains less than 7,800 words—
specifically, 5,610 words.
3.

This brief complies with applicable typeface requirements, see Fed. R.

App. P. 32(a)(5), and type style requirements, see Fed. R. App. P. 32(a)(6),
because it has been prepared in a proportionally spaced typeface using Microsoft
Office Word in 14-point Times New Roman font.
4.

The electronic version of this brief was scanned for viruses—andfound to contain none—using Trellix Endpoint Security, version 10.7.0.5, updated
April 6, 2023. See 3d Cir. L.A.R. 31.1(c).
5.

This brief was filed electronically using the electronic filing system.

See 3d Cir. L.A.R. 31.1; 3d Cir. L.A.R. Misc. 113.1.

/s/ David D. Lisitza
David D. Lisitza
Securities and Exchange Commission
202-551-5015 (Lisitza)
lisitzad@SEC.gov
Dated: May 15, 2023