Coinbase Inc. had a rare opportunity to jump ahead in a U.S. federal court dispute with the Securities and Exchange Commission (SEC) when a judge granted the company’s request to pursue a limited appeal of the company’s allegations. regulator on trading in crypto securities.
Whether the US digital asset exchange can get the US Court of Appeals for the Second Circuit to take up its appeal and agree that the SEC was wrong in its allegations that Coinbase mishandled trading in unregistered securities , such a decision would be echoed throughout the crypto world. industry.
Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York decided Tuesday to approve a request by Coinbase asking the high court to consider a central issue in the dispute, in a process known as an interlocutory appeal. And while Coinbase pursues that matter, the rest of the case will remain dormant.
Failla noted that he does not appreciate the company’s “efforts to smear the SEC’s approach to crypto assets,” but noted the clash in rulings by different federal courts on similar issues and decided that “conflicting decisions on an important legal issue” “We need guidance from the Second Circuit.”
At the center of the legal clash between the US securities regulator and the leading US crypto exchange is whether certain tokens traded on the platform should be considered securities and therefore considered a breach of the law .
Coinbase has argued, among other points, that issuers of crypto tokens traded on its secondary market owe nothing to buyers, so the tokens do not meet the requirements of the legal standard of what constitutes a security, therefore. called Howey’s test.
The judge said she grants the April 2024 request “because it presents an issue of fundamental law regarding the scope and application of Howey to crypto assets, about which there are substantial grounds for differences of opinion, and the resolution of which would advance the decision.” end”. Termination of SEC Enforcement Action.”
“We appreciate the court’s careful consideration,” Coinbase Chief Legal Officer Paul Grewal posted on social media site X. “We’re going to the Second Circuit.”
Read more: Coinbase takes on US SEC in effort to get answer to key cryptocurrency question
A spokesperson for the SEC, still led by crypto-skeptic Gary Gensler until he steps down as chairman when President-elect Donald Trump is sworn in on Jan. 20, declined to comment on the latest ruling.
Ultimately, this and other court disputes over what constitutes a crypto security could reach the Supreme Court, but ultimately become irrelevant if Congress passes a new law to define how the assets and their trading should be regulated in the US. is taking aim with its political operations and lobbying efforts, focusing on steering this year’s new Congress toward more industry-friendly legislation.
The leadership of the SEC is also about to move to Republican control, which will likely mean greater openness to the crypto industry. A new agency president could change the course of its law enforcement actions, including this court case.
