The Securities and Exchange Commission (SEC) ’s groundbreaking lawsuit against Coinbase Global Inc. could eventually end up at the Supreme Court.
The lawsuit filed this week has the potential to let the U.S. Supreme Court decide if digital assets count as securities, a decision that could have far-reaching implications for the industry.
“The crypto tokens traded by Coinbase users should be treated as unregistered securities,” said the U.S. Securities and Exchange Commission in a statement. The SEC alleges that the exchange has failed to register as a securities exchange, broker, and clearing house as required by law.
Coinbase, however, is pushed back, saying that crypto tokens are not securities for their entire lifetime and that the exchange only offers its customers those tokens whose utility exists independent of the minting conditions.
Read more: SEC Sues Coinbase Over Breaking Market Rules
The case’s big actors and relatively clear-cut facts make it more likely to reach the nation’s high court than similar lawsuits against peers like Binance Holdings Ltd. and Ripple Labs Inc. said Michael Pierson, managing partner at the corporate practice FisherBroyles LLP in New York in a Bloomberg interview. The ongoing, multi-year SEC lawsuit against crypto firm Ripple, which involves whether a single token (XRP) represents a security, offers any clues into the Coinbase détente — it is that things may take some time to resolve, particularly when there is sizable economic interest on either side of the outcome of the litigation.
The recent SEC actions could also motivate Congress to prioritize effective legislation for the digital asset sector.
The SEC’s cases targeting crypto exchanges mark a crusade that touches on nearly every facet of the crypto sector — because these exchanges allow American customers to trade crypto tokens.
Coinbase has been rolling out a crusade of its own in recent weeks.
On May 22, the firm launched a national campaign promoting the economic benefits of cryptocurrency. This “Crypto: Moving America Forward” campaign will include television commercials, events and other promotions.
Weeks earlier, on May 2, Coinbase launched an international cryptocurrency exchange, saying that would let institutional investors based in eligible jurisdictions outside the U.S. trade perpetual futures.
