Coinbase Scores Huge Victory Against US SEC

Coinbase secured a crucial victory against the U.S. SEC after gaining approval to appeal key legal questions to a higher court. Previously, Coinbase filed a motion against the SEC wherein the exchange compelled the regulator to provide access to private emails linked to Gary Gensler.

On January 7th, District Judge Katherine Polk Failla paused the case, allowing Coinbase to seek clarification by an appellate court on whether certain digital assets on its platform qualify as securities and if these transactions require an investment contract under the Howey test.

A Transitional Period

Coinbase argues that tokens listed on its exchange do not meet the legal definition of securities. Judge Failla acknowledged that this issue could be interpreted differently and that resolving it could streamline the case. Coinbase Chief Legal Officer, Paul Grewal, noted that the case will now move to the Second Circuit. The pause halts further litigation at the district court level until the appeal concludes.

This ruling comes during a transitional period for U.S. crypto regulations. With President-elect Donald Trump set to make some major changes soon, there could be a shift in policy. Under SEC chair Gary Gensler, the agency took a tough stance on crypto platforms like Coinbase, but Paul Atkins, who may lead the SEC under Trump, might deprioritize enforcement actions initiated by Gensler.

Mounting Criticisms

The SEC sued Coinbase in 2023, alleging that at least 13 tokens traded on the platform should have been registered as securities. Some claims were dismissed in 2024, including those related to Coinbase Wallet. Coinbase has criticized the SEC for approving its public listing while later questioning the legality of its operations.

Beyond the courtroom, Coinbase achieved another win by securing a license which enabled it to offer new products to New York residents. The company also raised concerns about federal efforts to restrict banks when it comes to working with crypto businesses, accusing regulators of unfairly targeting the industry.