Coinbase urges the U.S. Department of Justice to intervene and prevent states from independently penalizing encryption operators.

Coinbase's Chief Legal Officer Paul Grewal submitted a 14-page letter to the U.S. Department of Justice (DOJ) on September 15, urging the federal government to intervene and asking Congress to include "broad federal preemption provisions" in the upcoming vote on the digital asset market structure bill to prevent states from suing crypto operators under the "Blue Sky Laws" (Blue-Sky Laws).

After the SEC dropped the complaint, each state took over the lawsuit against Coinbase.

Since the U.S. Securities and Exchange Commission (SEC) withdrew its lawsuit against Coinbase in February of this year, multiple states in the U.S. have taken action. According to reports, the securities regulators from states including Oregon, Vermont, South Carolina, and Kentucky have successively filed civil lawsuits against Coinbase, accusing it of selling unregistered securities to local residents.

Oregon Attorney General Dan Rayfield stated bluntly:

"Because federal regulators will no longer handle these important cases, each state must step up to fill the gap and continue enforcement."

Oregon took the lead, and Coinbase also countered the state government.

Previously, the state of Oregon sued Coinbase in April for violating state securities laws. Coinbase subsequently moved the case to federal court and, in June, it was transferred to the United States District Court for Oregon for adjudication.

Coinbase subsequently counterattacked in July by suing Governor Tina Kotek in state court, accusing the state government of "privately" modifying the encryption regulatory process without holding public hearings and related legislative procedures. This counter-lawsuit is expected to have a court meeting on 10/29 to confirm the subsequent hearing progress.

Coinbase sent a letter to the DOJ, requesting Congress to intervene.

As of 9/15, Coinbase's Chief Legal Officer Paul Grewal sent a letter to the DOJ, requesting federal government intervention and urging Congress to apply pressure to include a "broad federal preemption clause" in the digital asset market structure bill. The main demands are:

As long as it is a digital asset regulated by the federal government, it is not considered under the "Blue Sky Laws" of the states.

Clearly stipulates that state-level licenses and other regulatory requirements "do not apply to encryption operators."

These new regulations will be retroactive, meaning they will apply to all relevant cases that have already occurred in the past.

The letter from Coinbase Chief Legal Officer Paul Grewal

Grewal also posted on Twitter (X) saying:

"If a service is legal under federal law, but Oregon can still sue, then this is not a normal federal system, but a failure of government."

( Note: Blue-Sky Laws refer to the securities laws enacted by individual states in the United States, primarily aimed at protecting investors from being sold worthless or potentially fraudulent investment products. The name originated in the early 20th century when legislators criticized certain speculative investments as being as empty as a blue sky, hence the establishment of regulations to prevent such "selling air" situations. )

The legislative process for digital assets is heating up, while regulation remains the focus.

Just as Coinbase's appeal to the DOJ was exposed, the U.S. Senate Banking Committee is also preparing to vote on the "Digital Asset Market Structure Act." This bill will clarify the division of roles between the SEC and the Commodity Futures Trading Commission (CFTC) in the regulation and enforcement of encryption.

Grewal emphasized that the DOJ should submit a statement to Congress requesting legislation to explicitly exclude the application of state blue sky laws, in order to avoid a situation where each state acts independently, resulting in inconsistent cryptocurrency regulatory standards across the United States.

This article urges Coinbase to call on the U.S. Department of Justice to intervene and stop states from independently penalizing encryption operators. It first appeared in Chain News ABMedia.