- The SEC has filed a motion to halt Coinbase’s appeal in the ongoing litigation.
- Coinbase had requested permission to ask the Second Circuit Court of Appeals about the applicability of the Howey Test to digital assets.
- The SEC accuses Coinbase of operating as an unregistered broker, exchange, and clearinghouse in the U.S.
The SEC has moved to halt Coinbase’s appeal in the ongoing litigation, questioning the crypto exchange’s application of the Howey Test to digital assets. This development underscores the ongoing tension between regulatory bodies and cryptocurrency platforms.
SEC Moves to Halt Coinbase’s Appeal
The U.S. Securities and Exchange Commission (SEC) has filed a motion to stop Coinbase’s appeal to the court in the ongoing litigation. The crypto exchange had applied for permission to ask the Second Circuit Court of Appeals if the Howey Test, a test created by the Supreme Court to determine whether certain transactions qualify as “investment contracts,” should apply to digital assets.
The Howey Test and Cryptocurrencies
The SEC’s stand revolves around the assertion that some cryptocurrencies are securities and, as such, would meet the Howey Test. This would require Coinbase to obtain the SEC’s approval before making these cryptocurrencies available for customers to trade. Coinbase, however, accuses the SEC of attempting to create a “new legal test” that would fit cryptocurrencies into existing securities precedent, a move already resisted by a district judge.
SEC’s Counterarguments
The SEC argues that Coinbase has not successfully argued that an appeal is necessary. It points out that Coinbase has not proved there was a “controlling question” in its original filing. The SEC also notes a disjointed argument in Coinbase’s filing, citing the crypto exchange’s claim of focusing on a specific legal question about “contractual obligations.” According to the SEC, Coinbase’s argument about the application of Howey to crypto is an entirely different question altogether.
Conclusion
The SEC’s countermotion to Coinbase’s request to appeal underscores the ongoing tension between cryptocurrency platforms and regulatory bodies. The final decision now lies with Judge Katherine Polk Failla, who is overseeing the case. If Failla sides with Coinbase, the crypto exchange will proceed to send the motion to the appeals court, potentially setting a precedent for future cryptocurrency regulation.
