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SEC rejects Coinbase (COIN) attempt to get appeals court answer to key cryptocurrency question
US regulators said an appeals court should not heed Coinbase’s request to review how – or whether – conventional securities rules apply to cryptocurrencies.
Coinbase, the largest US cryptocurrency exchange, he asked permission ask the Second Circuit Court of Appeals whether the Howey Test, a long-standing Supreme Court securities assessment, should apply to digital assets. Coinbase hopes this doesn’t happen.
Coinbase has not successfully argued that this is necessary, the U.S. Securities and Exchange Commission said on Friday.
The question is at the heart of the SEC’s accusation that Coinbase operates as an unregistered broker, exchange and clearinghouse in the United States. If some cryptocurrencies are securities, thus satisfying the Howey test, that means Coinbase had to get the SEC’s blessing before allowing customers to trade them. , according to regulators.
In his warehousethe SEC said Coinbase was trying to create a “new legal test” to understand how cryptocurrencies might fit into existing securities precedents that a district court judge had already rejected.
“Coinbase is not yet able to advance a single coherent version of this theory, which it now argues presents a scrutiny issue,” the document reads. “This is not surprising: in eighty years ‘no court’ has ever required post-sale ‘contractual commitments’ or anything beyond the three factors expressly enumerated by the Supreme Court in Howey.”
The document went on to argue that Coinbase had not successfully argued that a “control question” existed in its document.
The SEC further argued that while Coinbase’s appeal claims it is focusing on a specific legal issue related to “contractual obligations,” its actual argument on Howey’s application to cryptocurrencies is an entirely different matter.
“Similarly, in an attempt to satisfy the ‘priority value for a certain number of cases’ factor, Coinbase again moves away from the issue of ‘contractual obligations,’ this time towards ‘[h]ow Howey applies to secondary market crypto transactions,’” the document reads.
Judge Katherine Polk Failla, who is overseeing the SEC’s case against Coinbase, is expected to rule on the motion for interlocutory appeal. If she sides with Coinbase, the exchange may send the motion to the actual appeals court.