Today, the leading cryptocurrency exchange, Coinbase, witnessed progress in its ongoing defense against the SEC. Coinbase has long argued that the existing regulatory framework for securities fails to account for the multifaceted traits of digital assets, making compliance nearly impossible to uphold.

After being previously denied their petitions and requests for clarity from the SEC, a frustrated Coinbase petitioned the Third Circuit Court of Appeals, claiming that the charges against them were arbitrary and lacked sufficient reasoning under the Administrative Procedure Act (APA). The court opinion therefore leaned in favor of Coinbase by stating that the SEC inadequately defended its stance, and must provide a more detailed justification for its position.

The decision today highlights the court’s demand for transparency with agency decisions, however they did not mandate the agency to begin formal rulemaking, giving the SEC leave to continue regulating digital assets as it sees fit. While the news of this ruling is favorable, it has done little to quell the growing impasse between regulators and the digital assets industry over how emerging technologies will fit under the scope of traditional securities laws.