Accusing the SEC of evading the Howey test, Coinbase has launched an interlocutory appeal.
In its interlocutory appeal against the SEC, Coinbase took advantage of the present political climate in the United States Congress.
Coinbase contended in a court filing dated May 24 that the SEC attempted to “side-step” the Howey test, a regulatory framework used to ascertain if assets are securities. The SEC and the cryptocurrency sector have fought for years over whether digital assets should be subject to this standard.
Paul Grewal, the chief legal officer of Coinbase, outlined the stance of the exchange. Based on his analysis, the major concern was whether the SEC has the authority to oversee bitcoin transactions as “investment contracts” in the absence of any corresponding contractual duties.
Bringing attention to the SEC’s parallel appeal in the Ripple case, Grewal pointed out the agency’s inconsistencies. This unresolved legal matter is crucial to the cryptocurrency business, he said. The CEO went on to say that the SEC has a long record of not cooperating with prominent figures in the business.
“We approached the SEC with the intention of having a productive and fair discussion on a regulatory framework for crypto innovation in the US from the start. Rather, we have seen slammed doors, shifting roles, and litigation, as has been the case for much of the business,” Grewal said.
Coinbase made an impressive point by bringing attention to new laws that could affect the authority of the SEC over the dynamic sector. In a move that might give the Commodity Futures Trading Commission (CFTC) more authority to regulate, the US House of Representatives approved the Financial Innovation and Technology for the 21st Century Act (FIT21) last week.
The bill’s goal is to regulate the cryptocurrency markets, and it has the backing of influential people in the sector, despite the opposition of SEC Chair Gary Gensler.
Coinbase said that “lawmakers are increasingly opposed to the SEC’s stance. They pointed out that the U.S. House of Representatives recently passed bipartisan digital asset legislation, which would deny the SEC the extensive authority it asserts.”
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