The company positioned the case, reported by Bloomberg Law, as crucial for resolving regulatory uncertainty in the crypto industry.
Coinbase has formally requested that the US Court of Appeals for the Second Circuit decide whether digital token trades on its platform are subject to federal securities law.
The company highlighted the importance of the case in resolving regulatory uncertainty within the crypto industry.
In its January 21 petition, Coinbase argued that the trades on its platform should not be classified as securities transactions, emphasizing that they constitute asset sales rather than investment contracts, Bloomberg Law reported.
The company further stated that anonymous parties exchange tokens without creating any obligations beyond the immediate transaction.
This interpretation challenges the application of the Howey test, a 1946 standard for identifying investment contracts, to the trades in question.
The petition follows the US District Court for the Southern District of New York’s approval of an interlocutory appeal on the matter.
Judge Katherine Polk Failla described the Howey question as a “difficult issue of first impression” for the Second Circuit.
The SEC filed a lawsuit against Coinbase in June 2023, alleging that the company operated as an unregistered securities exchange, broker, and clearing agency.
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