A U.S. judge has put the legal dispute between Coinbase and the Securities and Exchange Commission (SEC) on hold for now, giving Coinbase the chance to ask a higher court to clarify a crucial legal issue.
On the 7th of January, District Court Judge Katherine Polk Failla gave her approval for Coinbase to take a significant matter before an appeals court for review.
The Coinbase Vs SEC Legal Battle Will Set Precedent for the US Crypto Industry
The discussion will focus on determining if specific digital assets transacted through Coinbase meet the criteria of being considered securities. Additionally, it aims to provide clarity on whether transactions with these assets constitute an “investment contract” based on the Howey test.
Most importantly, the case proceedings will remain on hold until the appeal is resolved.
In simple terms, Paul Grewal, Coinbase’s Chief Legal Officer, expressed that Judge Failla has allowed them to move forward with an early appeal against the SEC’s objections, and has also paused the ongoing court case in the district court. This means they will now take their case to the Second Circuit Court of Appeals. He expresses gratitude for the judge’s thoughtful decision-making process.
As a researcher, I’d like to share my findings on Coinbase’s stance regarding the tokens traded on their platform. According to them, these tokens do not conform to the legal requirements that classify a financial instrument as a security. In other words, they claim that the issuers of these tokens are under no obligation to fulfill any responsibilities towards the buyers. This is based on Coinbase’s interpretation that these tokens fail to meet the Howey Test’s criteria for being considered a security.
Furthermore, Judge Failla agreed with this argument. She explained that the legal matter provides strong bases for varying viewpoints. Addressing this dispute would likely speed up the resolution of the SEC’s enforcement case.
At a critical juncture for the cryptocurrency field, the upcoming presidency of Donald Trump could bring about changes in policies affecting the sector. Notably, under Gary Gensler’s leadership, the Securities and Exchange Commission (SEC) has filed significant legal actions against prominent crypto platforms due to securities law violations.
Currently, it’s expected that Paul Atkins, who has been appointed as the chair of the SEC, will shift focus away from cryptocurrency-related enforcement actions that were started during the tenure of the previous leadership.
Back in 2023, I found myself at the center of a legal tussle when the Securities and Exchange Commission (SEC) brought a lawsuit against me, specifically Coinbase. The allegation? That my company had enabled the trading of more than a dozen tokens which the SEC claims should have been registered as securities.
After a 2024 court decision, most aspects of the case moved forward. However, allegations concerning Coinbase’s digital wallet services were thrown out. Moreover, Coinbase has voiced concerns over the SEC for granting approval for its public listing and subsequently challenging the legality of their business operations.
A Streak of Regulatory Wins
On a different note, Coinbase managed to secure an approval for a license from New York’s regulatory bodies on the very same day. This authorization enables them to introduce additional services to the residents of New York.
According to Coinbase, federal regulators are taking steps to limit banks’ participation in crypto transactions.
1. The allegations have led to increased examination of regulatory procedures, resulting in charges that a new initiative, known as “Operation Chokepoint 2.0,” is being employed with the intention of limiting the growth and development of the cryptocurrency sector.
The accusations have led to a closer look at regulatory procedures, suggesting that a new initiative called “Operation Chokepoint 2.0” is being used with the intention of restricting the growth and advancement of the cryptocurrency industry.
“Senator Cynthia Lummis has stated that Michael Barr, in his role as Vice Chair for Supervision, has repeatedly fallen short of meeting his responsibilities. According to her, this negligence has allowed Operation Chokepoint 2.0 to continue and has illegally expanded his authority at the expense of Wyoming’s digital asset sector,” (written on platform X, formerly known as Twitter).
In their discussions about fresh laws to define the regulatory structure of digital assets, the industry is advocating for regulations that foster development. If legislation defining U.S. cryptocurrency regulations becomes established, potential court cases on this matter may become less significant.
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2025-01-08 06:00