Coinbase, the leading U.S. crypto exchange, has recently filed a brief in a San Francisco federal court challenging the U.S. Securities and Exchange Commission (SEC)’s broad definition of “securities.” Coinbase’s primary argument is that digital assets like Bitcoin, Ethereum, and other cryptocurrencies are not securities since they are not traditionally “investment contracts” as defined by SEC. Coinbase is hoping to set a precedent which would limit the scope of the SEC’s regulatory oversight of the crypto industry. The brief was filed as part of Coinbase’s motion to dismiss a lawsuit brought against it by the SEC last October. In the suit, the SEC alleged that Coinbase failed to register as a broker-dealer and as an alternative trading system when it launched its Coinbase Pro platform in 2018. Coinbase denies those charges and is contesting the lawsuit on several legal grounds, one of which is that the SEC cannot regulate cryptocurrencies as securities. Coinbase is challenging the SEC’s position that digital assets are securities, arguing that the Commission’s view is “inconsistent with the plain meaning of the term and with Congress’s intent.”
