SEC vs. Coinbase: Judge calls for clarity amid regulatory fight
The ongoing legal clash between the U.S. Securities and Exchange Commission (SEC) and popular cryptocurrency exchange Coinbase has seen a significant twist as Judge Katherine Polk Failla scrutinizes the regulator’s claims. A recent hearing revealed a judge’s dissatisfaction with the SEC’s comments and raised expectations that the U.S. will eventually recognize cryptocurrencies as non-securities.
One thing is clear. Now we have something in common: the token itself is not a security. Following the summary judgment in SEC v Ripple, Judge Torres reportedly ruled as follows: #XRP It is not a security in itself, it is just an orbiter. But already… It seems to have had a far-reaching impact, including https://t.co/dMWeAvXlYF.
— Bill Morgan (@Belisarius2020) January 18, 2024
Regulatory Dispute Resolution
In a recent courtroom showdown, Judge Failla secretary Provides clearer definitions of terms essential to the case, such as “securities” and “staking.” In response, the SEC criticized Coinbase, claiming it had devised a “new version of the Howey test.” First established in 1946, this regulatory litmus test determines whether a particular transaction qualifies as an investment contract.
It has been postponed.
that much @SECGovTo summarize (broadly) the argument: @Coinbase I’m creating a new version of the Howey test and I can’t deviate from Howey as it was originally written.
The SEC lawyer said, “In 1934, Congress today…
— Eleanor Terrett (@EleanorTerrett) January 17, 2024
Coinbase’s Defense and SEC’s Warning
While the proceedings were ongoing, the SEC warned Coinbase against being perceived as a reinterpretation of the Howey test. This suggested that such measures would undermine the regulatory structure carefully established in 1934. However, Coinbase strongly refuted these claims, claiming that it did not reinterpret the Howey test. Howey test. Instead, Coinbase’s legal team argued that the SEC is attempting to: “Extend the Howey test to suit your situation.” A Coinbase lawyer expressed concern, saying:
“The committee’s complaint takes the court into completely unprecedented territory. The SEC must understand the legal language and follow enforcement and rulemaking actions that do not twist it backwards. “The bridge is too far, so please disperse completely.”
Judge Failla’s legal precedent
Judge Failla’s reliance on previous rulings, particularly those of Judges Jed Rakoff and Analisa Torres in cases involving LBRY and XRP, was a notable aspect of this legal drama. XRP advocate Bill Morgan sees this reliance as a positive sign, saying: “Now the token itself “It is not a security.” Judge Torres previously concluded that XRP was not a security and contributed to the evolving cryptocurrency regulatory environment.
Future Outlook: Cryptocurrency as a Non-Security?
The court’s developments, particularly Judge Failla’s continued calls for clarity and reliance on past rulings, are seen by some, including XRP advocate Bill Morgan, as a sign that the United States may eventually classify cryptocurrencies as non-securities. This potential change in classification could have significant implications for the broader cryptocurrency industry.
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