The North American Securities Administrators Association (NASAA) has submitted a formal brief in support of the Securities and Exchange Commission (SEC) in their ongoing legal battle against cryptocurrency exchange Coinbase.
NASAA, a non-profit association representing securities regulators at the state and provincial levels in the United States, Canada, and Mexico, has expressed a strong interest in the outcome of this case.
In the filed brief, NASAA argues that the SEC’s position, which asserts that certain crypto assets on Coinbase should be classified as securities and therefore subject to SEC regulation, is in accordance with well-established securities laws.
The brief asserts that the SEC’s stance aligns with the agency’s longstanding public position, as well as the positions put forth by state securities regulators and even the understanding of digital asset issuers themselves.
Furthermore, the brief rejects Coinbase’s attempt to narrow the definition of a security and argues that the Howey test, which has been utilized for decades to determine if an asset is a security, should be applied to the cryptocurrency industry.
According to the brief, the court should decline any revision of the Howey test that would enable digital asset enterprises to evade regulatory oversight.
In June, securities regulators from ten states initiated enforcement actions against Coinbase, alleging that the exchange was offering and selling its staking program, which allows customers to earn rewards for holding cryptocurrencies, as an unregistered security.
The lawsuit alleges that Coinbase permitted the trading of digital assets that meet the criteria of securities without registering as a national securities exchange. The SEC maintains that this includes at least nine tokens listed on Coinbase.
This high-profile case carries significant implications for the regulation of the cryptocurrency industry. If the ruling favors the SEC, numerous digital assets, products, and services may become subject to stricter oversight.