SEC Seeks More Time in Legal Dispute with Coinbase
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The Securities and Exchange Commission (SEC) has asked for an extra 28 days to respond to Coinbase’s legal appeal. This legal battle revolves around treating digital assets as securities or as a different type of financial asset. Before now, the SEC was expected to respond by February 14, but now the organization seeks an extension until March 14.
The Role of the SEC’s Crypto Task Force
Recently, the SEC formed a new task force focused on cryptocurrency. This task force was organized by Acting Chair Mark Uyeda and led by Commissioner Hester Peirce. The SEC stated in its court filing that the task force’s work might influence its response to Coinbase’s appeal. The agency believes taking more time to review crypto-related issues will help ensure a proper decision.
Prior to this time, under the previous leadership of Chair Gary Gensler, the SEC took a strict stance, arguing that most cryptocurrencies should be considered securities. However, the new leadership under President Trump has been more open to pro-crypto policies. The SEC argues that to ensure fairness in the case, this extra time will allow for better decision-making.
At this junction, Coinbase has agreed to this extension, and the SEC promises that no party will be negatively affected by the delay.
Legal Challenges and Coinbase’s Response
The SEC initially sued Coinbase in 2023, accusing the company of running an unregistered exchange and offering illegal financial services, staking, and wallet services. However, this allegations were rejected by U.S. District Judge Katherine Polk Failla. After that, Coinbase filed an appeal, claiming that regulators, legislators, and courts cannot agree on how the Howey Test should be applied to cryptocurrencies. This legal test decides whether an asset qualifies as a security.
Last month, Judge Failla granted Coinbase’s appeal, recognizing that the issue of crypto regulation remains unclear. Judge Stephanos Bibas from the U.S. Court of Appeals also criticized the SEC for not properly addressing Coinbase’s request for crypto-specific rules.
However, in a separate legal matter, Coinbase has filed a lawsuit against the SEC and the Federal Deposit Insurance Corporation (FDIC) concerning information related to financial restrictions following the FTX collapse. To this, Judge Ana C. Reyes has condemned the FDIC for its lack of transparency in the case.
This ongoing legal battle between the SEC and Coinbase reflects the broader struggle to define digital assets regulations in the United States.
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