After the news of the Securities and Exchange Commission (SEC) and Binance’s request to halt their legal battle, some believe other crypto litigations will be next. However, Coinbase’s “unique” situation could shed some light on the regulatory agency’s new crypto approach.
Coinbase To Follow SEC Vs Binance’s Steps?
Following the news of the SEC and Binance’s joint motion to stay the US regulator’s lawsuit against the global crypto exchange, the industry has speculated that other crypto litigations, including Coinbase, will follow suit.
As reported by Bitcoinist, the regulatory agency and Binance recently requested a 60-day pause on their legal battle, arguing that the Commission’s new changes could impact the case. The joint motion states that the SEC’s newly created Crypto Task Force, led by Commissioner Hester Peirce, could “impact and facilitate the potential resolution of this case.”
According to FOX Business journalist Elizabeth Terret, the joint motion is the first request to pause crypto litigation in the court since Mark Uyeda became acting chair of the SEC on January 10, and it could lead to other non-fraud cases, such as Ripple, Coinbase, and Kraken to do the same.
Nonetheless, Terret has stated that, compared to the other crypto firms, Coinbase is in a “unique situation,” as the crypto exchange’s legal battle was halted last month. The journalist noted that the exchange awaits the SEC’s response to its appeal regarding crypto trade classification.
The US watchdog sued the crypto exchange in 2023, alleging that Coinbase operated as an unregistered broker-dealer and illegally sold unregistered securities through its staking program.
On January 7, New York Federal Judge Katherine Failla granted a “rare” interlocutory appeal, based on the “conflicting decision” from previous crypto cases and the need for clarity on how the Howey Test is applied to crypto assets.
The interlocutory appeal allows Coinbase to contest the SEC’s claims at the Second Circuit Court of Appeals. On January 21, 2025, the exchange filed a petition for permission to appeal.
In the petition, Coinbase asked the US appeals court to rule out that crypto trades are not securities, arguing that millions of users, companies, and regulators “badly need clarity on what federal securities laws require.”
The exchange stated there was no more pressing issue in securities law than “the scope of the SEC’s authority to regulate secondary trades of digital assets” and that the crypto case was “an idea vehicle” to address this issue and provide clarity.
Crypto Industry Awaits Valentine’s Day Deadline
The SEC’s deadline to respond to Coinbase’s request to file the appeal ends this Friday, February 14. The agency’s response could shed some light on how the US agency will approach crypto litigations under the new acting chair and new regulatory approach.
According to Terret, the SEC could oppose the request for an appeal, which would suggest that the SEC still plans to argue that securities laws apply to most crypto tokens as former chairman Gary Gensler did. The journalist noted that Uyeda and Peirce stated that the law in this area hasn’t been clear.
The regulatory agency could not oppose the request for appeal, signaling that the SEC “wants to resolve the issue of how securities laws apply to crypto.” According to Commissioner Peirce, this issue is being addressed by the Crypto Task Force.
Lastly, the SEC could either ask for an extension of the deadline or decide not to proceed and drop the case. Terret concluded that the Commission’s response to Coinbase “will reveal a lot in terms of how the agency plans to handle ongoing litigation of cases disputing securities law.”
