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Highlights
- John Deaton files amicus brief in SEC vs. Coinbase appeal, advocating for clearer crypto regulations.
- Deaton criticizes SEC's inconsistent stance on digital assets as securities in legal brief.
- Coinbase seeks judicial review to challenge SEC's definition of digital asset transactions as securities.
Massachusetts Senate candidate John Deaton is submitting an amicus brief backing the Coinbase exchange in its appeal against the Securities and Exchange Commission (SEC). The brief underscores the urgent need for clearer digital asset regulations, pointing to what Deaton describes as the SEC’s inconsistent regulatory approach.
Deaton’s legal insights draw from various sources, including cases involving Ripple, LBRY, and Telegram. Deaton’s legal presumptiveness is based on different types of cases, such as Ripple, LBRY, Telegram, etc.
He also cites prior SEC positions on cryptocurrencies and numerous statements from regulators and legislators pointing out concerns with the agency’s regulatory approach. All these elements together show the complicated crypto regulatory landscape and the challenges that the industry participants have to face because of regulatory uncertainties.
Legal Landscape and SEC’s Inconsistencies
Deaton, in his brief, criticizes the SEC for its inconsistent position on the determination of whether cryptocurrency tokens are securities. He singles out the SEC’s assertion that “ecosystem is the security,” claiming that the regulatory approach is a non-starter. According to Deaton, Bitcoin is distinct from other cryptocurrencies but the justification given by the SEC as to why it should not be classified as a security is inadequate and is not logically consistent.
🚨SCOOP: Massachusetts Senate candidate @DeatonforSenate/@JohnEDeaton1 is putting his #crypto law hat back on and will file an amicus brief in support of @Coinbase’s motion for interlocutory appeal later today.
In the brief, Deaton highlights the urgent need for legal clarity…
— Eleanor Terrett (@EleanorTerrett) April 26, 2024
This criticism is part of a larger debate in the legal industry about the use of the Howey test for digital assets and their position within regulatory frameworks.
Coinbase’s Challenge to SEC Authority
Coinbase has recently filed for an interlocutory appeal, a procedural mechanism intended to challenge a particular aspect of the case before the trial begins. The appeal seeks review by the U.S. Court of Appeals for the Second Circuit and questions whether the SEC can classify a digital asset transaction as an investment contract when it does involve an obligation from the original issuer of the asset.
This filing is a confirmation of the fact that the SEC has created an open ground of disputes regarding the application of its authority over digital assets particularly after they have entered the secondary market.
According to Coinbase and other players in the industry, these assets should not fall under the SEC’s jurisdiction once they are detached from the context of the business in which they were created. The decision of this appeal would be crucial for the cryptocurrency sector and would also provide the level of regulatory control that applies to digital asset transactions
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