The litigation dispute between the cryptocurrency exchange Coinbase and the U.S. Securities and Exchange Commission (SEC) recently ushered in new developments. Presiding Judge Katherine Polk Failla on Tuesday granted Coinbase’s request to allow the exchange to file a “narrow appeal” against SEC charges that Coinbase traded “crypto securities.”
If Coinbase is able to get its appeal accepted by the U.S. Court of Appeals for the Second Circuit, and the appeals court agrees that the SEC’s allegations that Coinbase mishandled unregistered securities were wrong, the final outcome of the appeal could shed light on whether certain cryptocurrencies Should be considered a security" is the ultimate answer.
U.S. District Judge Katherine Polk Failla of the Southern District of New York granted Coinbase’s request on Jan. 7 to ask the higher court to consider a central issue in the company’s lawsuit with the SEC. Coinbase filed this request as an "interlocutory appeal".
Judge Katherine Polk Failla noted that while she disagreed with Coinbase’s harsh criticism of the SEC’s treatment of cryptocurrency assets, she noted that different federal courts have issued conflicting decisions on similar issues, so she believed that the court was targeting the same important issue. Conflicting decisions on legal issues "necessitate seeking guidance from the Second Circuit Court of Appeals."
The SEC’s legal dispute with Coinbase centers on whether certain cryptocurrencies traded on the Coinbase platform should be considered securities. The rest of the lawsuit will be put on hold while Coinbase pursues answers to this part.
Coinbase contends that issuers of cryptocurrencies that trade on its secondary market do not owe buyers anything, so the tokens do not meet the Howey Test’s definition of a “security.”
Judge Katherine Polk Failla said she granted Coinbase's request "because it raises legal management issues regarding the impact and application of the Howey test to cryptoassets, an important area in which opinions differ and the The resolution will promote the eventual termination of SEC enforcement actions."
Coinbase General Counsel Paul Grewal posted on the social platform X: "We thank the court for its careful consideration. We will go to the Second Circuit Court of Appeals."
An SEC spokesman declined to comment. Currently, SEC Chairman Gary Gensler is still in charge. Gensler will not step down as SEC Chairman until Trump is sworn in as president on January 20.
Ultimately, the dispute over what constitutes a cryptocurrency security may end up before the Supreme Court, but if Congress passes a new law defining how the United States should regulate cryptoassets and their transactions, the content of the final ruling will be irrelevant. This is the goal of the current political operations and lobbying actions of the encryption industry, focusing on guiding the new Congress to enact legislation that is more beneficial to the encryption industry this year.
The leadership of the SEC is also about to be handed over to Republican control, which may mean that the authority will be more open to the cryptocurrency industry. The new SEC chairman may change the course of enforcement actions, including his stance on the Coinbase lawsuit.
"Coinbase is allowed to appeal the SEC's charges, which may clarify whether certain cryptocurrencies are "securities."" This article was first published on (Blocker).