The recent legal dispute between the SEC and numerous cryptocurrency exchanges took a different direction in a recent hearing where United States Judge Katherine Polk Failla questioned the regulator. She expressed dissatisfaction with the assertions made by the agency against Coinbase, and cryptocurrency advocate Bill Morgan sees this as an indication that cryptocurrencies will eventually be recognized as non-securities in the U.S. Clarity Is Needed During the hearing, Judge Failla asked the SEC to offer clearer definitions for terms such as securities and staking, while criticizing Coinbase. As reported by Fox Business journalist Eleanor Terrett, the SEC contended that Coinbase is establishing a new version of the Howey Test. The SEC lawyer cautioned Coinbase about reinterpreting the Howey Test, stating that the Congress of 1934 would be surprised that today there would be such an easy workaround to the carefully constructed regulatory structure they created in 1934 with regard to the market. The Plot Thickens Coinbase rejected the allegations made by the SEC, asserting that they had not reinterpreted the Howey Test. The SEC legal team, on the other hand, claimed that the agency is stretching the Howey Test to fit the circumstances. In a previous post, Terrett highlighted the resilience shown by Judge Failla concerning rulings by Judge Jed Rakoff and Judge Analisa Torres on LBRY and XRP, respectively, for crucial insights. Reflecting on the determination made by Judge Torres regarding XRP as a non-security and the current state of the Coinbase lawsuit, Morgan remarked it is now commonly agreed that the tokens themselves are not securities.
