Amid its ongoing lawsuit against crypto exchange Coinbase, support for the SEC is gaining traction.
The US Securities and Exchange Commission (SEC) is gathering support from other securities regulators in its high-profile lawsuit against cryptocurrency exchange Coinbase. On Tuesday, two amicus briefs were filed supporting the agency’s argument that it should oversee the industry.
SEC Gains Tractions in its Action Against Coinbase
The SEC and Coinbase Fight is heating up as the crypto exchange faces another obstacle in its battle against the securities agency. US state authorities and legal experts have joined the SEC’s cause in arguing that Coinbase operated an unregistered exchange. The SEC primarily contends that the exchange acted as an unregistered securities exchange, broker, and clearing house and offered unregistered securities. The SEC’s primary position centres on Coinbase’s staking program and several digital assets traded on its platform, which the agency contends are “investment contracts” and, therefore, should fall under its purview.
The SEC alleges Coinbase violated the Securities and Exchange Act of 1934 and the Securities Act of 1933. The case’s eventual decision stands to shape the US’s future regulatory approach to digital assets.
Former SEC Officials Jump on The Bandwagon
Amicus briefs allow parties not directly affected but interested in the case to submit arguments to help the courts make a decision regarding the matter. The North American Securities Administrators Association (NASAA) submitted arguments to the court stating that the SEC’s legal position is not remarkable or novel and digital assets should not get special treatment.
The association, which comprises 68 members and includes securities regulators from all US states, said digital assets should not receive special treatment. It stated:
“The SEC’s theory in this case is consistent with the agency’s longstanding public position”, adding it is “well within the bounds of established law.”
The filing further said:
“There is no practical economic use case identified or widely adopted for the vast majority of digital assets, other than speculation.
While they receive outsized attention from the media and regulators because they are aggressively marketed and fertile ground for fraud, that attention belies the very limited size and significance of this ‘industry’ in the context of the broader U.S. economy.”
The NASAA brief, submitted by former SEC officials, including past Chair Mary Jo White, underlines the notion that traditional securities law should automatically apply to digital assets.
“Digital assets with characteristics typical of securities offer investors the same promise of a return and carry the same risks that led to the enactment of the federal securities laws.”
“Major Questions doctrine is irrelevant to this action”
Todd Phillips and Beau Baumann, two academic administrative lawyers, filed a second amicus brief. Phillips of Georgia State University and Baumann of Yale Law School argue that “the major questions doctrine simply is irrelevant to this action.” The two academics argue this because the Coinbase matter concerns enforcement against a specific company and not quasi-legislative rulemaking.
They stated:
“Far from asserting new power to regulate the ‘national economy,’ the SEC brought a specific complaint in federal court.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
