Summary
A federal judge expressed concern that the US Securities and Exchange Commission (SEC) has interpreted securities laws too broadly in its case against Coinbase. The judge questioned the SEC’s proposed implementation of the Howey test, which is used to identify an investment contract. The SEC has sued Coinbase for allegedly operating as an unregistered broker, exchange, and clearing agency. It claims that 13 cryptocurrencies available on Coinbase are securities. The judge expressed fears that the SEC’s interpretation could open the door to countless private actions and could potentially regulate collectibles or commodities as securities. Coinbase’s attorneys argued that there must be an enforceable agreement for an asset to be considered a security. The judge has not yet made a ruling on Coinbase’s motion to dismiss the charges.
Key Points
1. A federal judge expressed concern that the US Securities and Exchange Commission’s interpretation of securities laws is too broad, specifically regarding the implementation of the Howey test.
2. The SEC sued Coinbase for allegedly operating as an unregistered broker, exchange, and clearing agency, claiming that 13 cryptocurrencies on the platform are securities.
3. Coinbase’s legal team argued that there must be an enforceable agreement for an asset to be deemed a security, and they appealed to the major questions doctrine to question the SEC’s authority in ruling on issues of significant political or economic importance.