SEC Refutes Coinbase's Call for Legal Review on Crypto as Securities

SEC Challenges Coinbase's Legal Stance

U.S. regulators have voiced opposition to Coinbase's petition for a judicial review concerning the application of traditional securities laws to cryptocurrencies. Coinbase, the prominent American cryptocurrency exchange, sought the Second Circuit Court of Appeals' guidance on whether the Howey Test, a time-honored Supreme Court framework for defining securities, pertains to digital assets.

Crypto as Securities?

The Securities and Exchange Commission (SEC) highlighted on Friday that Coinbase has not made a compelling case for this judicial inquiry. The core of the SEC's argument against Coinbase is the exchange's alleged operation without proper registration, potentially treating certain cryptocurrencies as securities which, according to the Howey Test, would require SEC approval for their trade.

Seeking Legal Clarity

Despite Coinbase's efforts to shape a novel legal test for crypto's place within the established securities framework, the SEC insists a district court judge has already dismissed this approach. The SEC's filing emphasizes that no legal precedent necessitates such a test, and the fundamental issue raised by Coinbase regarding 'contractual obligations' diverts from the real question of Howey's applicability to crypto transactions in a secondary market. Judge Katherine Polk Failla is set to make a decision on Coinbase's appeal motion.