The cryptocurrency exchange Coinbase is urging the U.S. Department of Justice to intervene in state-level cryptocurrency enforcement after federal regulators dropped their case against the company earlier this year.
In a 14-page letter sent to the DOJ on Monday, Coinbase's Chief Legal Officer Paul Grewal stated that federal officials should take action against state-level enforcement targeting cryptocurrency companies. According to Grewal, the DOJ should urge Congress to "intervene and enact broad preemption provisions."
"When Oregon can sue us for providing services that are legal under federal law, it indicates there is a problem," Grewal said in a post on X on Tuesday. "This is not federalism—this is government out of control."
The letter was sent following a lawsuit filed by Oregon Attorney General Dan Rayfield in April, accusing Coinbase of selling unregistered securities to state residents—similar to the federal case previously brought by the U.S. Securities and Exchange Commission (SEC).
After the SEC withdrew its lawsuit in February, several other U.S. state securities agencies, including those in Vermont, South Carolina, and Kentucky, followed suit.
According to Rayfield, U.S. states "must fill the enforcement vacuum left by federal regulators, who have abandoned these important cases under the new administration."
In response to the Oregon lawsuit, Coinbase has requested that a federal judge hear the case, which was transferred to the U.S. District Court for Oregon in June.
The company also filed a lawsuit against Oregon Governor Tina Kotek in state court in July, alleging that changes to cryptocurrency policy were "entirely conducted behind closed doors" without "public hearings, debates, and final actions" in the legislature. The lawsuit is scheduled for a status check hearing on October 29.
During the Oregon and Coinbase litigation, lawmakers on the U.S. Senate Banking Committee are expected to vote soon on legislation to establish a digital asset market structure.
The bill is expected to clarify the roles of U.S. financial regulators—the SEC and the Commodity Futures Trading Commission (CFTC)—in cryptocurrency regulation and enforcement.
"The DOJ should submit a comment urging Congress to adopt broad preemption provisions in any market structure legislation," Grewal stated. "Any preemption provisions should classify federally regulated digital assets as exempt from state blue sky laws, clearly stating that new state licensing and other state regulatory requirements do not apply to cryptocurrency intermediaries and have retroactive effect."
While Coinbase currently does not face any active federal cases, the company filed a motion last week regarding a Freedom of Information Act request involving former SEC Chair Gary Gensler's text messages.
The exchange has submitted more than one information request to the SEC in 2023 civil enforcement actions—possibly seeking evidence for its allegations against cryptocurrency companies regarding securities cases.
Cointelegraph reached out to the Oregon Attorney General's office for comment on Coinbase's letter but had not received a response by the time of publication.
Related: The U.S. Securities and Exchange Commission (SEC) reaches an agreement with Gemini Trust over cryptocurrency lending dispute
Original article: “Coinbase urges U.S. Department of Justice to act against state enforcement cases”
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