Coinbase is stepping up its fight against the SEC by asking the Commodity Futures Trading Commission (CFTC) to make public the conversations it has had with 12 different cryptocurrency producers. The SEC says that these tokens are unregistered stocks. This is one of the main points of the case against the crypto exchange.
On October 1, Coinbase asked a federal court to force the CFTC to give them this important information. The business thinks that learning about how the CFTC works with these crypto producers could help them figure out if the tokens in question are legally stocks. This information might show that the SEC’s claims are not true and back Coinbase’s view that these tokens do not need to be registered as stocks.
In June 2023, the SEC sued Coinbase, saying it was acting as an illegal stocks broker and exchange. This started the court case. The SEC says that Coinbase should have used the Howey Test to register 12 coins as stocks. Coinbase says that the coins are not securities and that it has not broken any rules about securities by selling them.
To make its case stronger, Coinbase has asked the CFTC for relevant papers, but the agency has so far refused, citing problems like privilege and overbreadth. The exchange has tried to narrow its request, but the CFTC has refused to look for the messages it wants. Coinbase says that this information is very important for figuring out how other regulatory bodies, like the CFTC, see these digital assets and whether they are stocks or commodities.
Coinbase says the CFTC’s failure to follow the subpoena is wrong, especially since the SEC was previously ordered by the court to share similar information. The crypto exchange made it clear that both regulatory bodies have been in talks with people who make digital assets, which makes their messages very important to the case.
If this lawsuit is successful, it could give Coinbase important proof to question the SEC’s decision that the 12 coins are securities. This could also show that U.S. regulatory bodies don’t agree on how to identify and control cryptocurrency. The result of this case could have a big effect on how crypto is regulated in the U.S. in the future, especially since the crypto industry wants the law to be clearer and more consistent about how it treats digital assets.
Coinbase keeps saying that the current stock laws don’t take into account how cryptocurrencies work, which shows that we need more specific rules to encourage innovation and keep everyone in line. As the court case goes on, the result could set a standard for future cases involving cryptocurrency platforms and token issuers, which would have big effects on the whole industry.
