-
Coinbase
has
filed
for
a
so-called
interlocutory
appeal
in
federal
court
to
challenge
just
a
single
legal
point
at
the
heart
of
its
dispute
with
the
U.S.
Securities
and
Exchange
Commission. -
The
requested
appeal
would
ask
a
higher
court
to
review
whether
a
digital
asset
transaction
that
poses
no
obligation
to
the
original
issuer
of
the
asset
should
be
considered
an
investment
contract
that
would
be
regulated
by
the
SEC.
Coinbase
is
seeking
to
rip
the
bandage
off
of
a
legal
impasse
at
the
center
of
the
crypto
industry’s
fight
with
the
U.S.
Securities
and
Exchange
Commission
(SEC),
filing
for
an
interim
appeal
on
Friday
that
would
ask
a
higher
federal
court
to
drill
into
the
heart
of
the
regulator’s
stance
on
digital
assets,
even
as
the
broader
SEC
case
proceeds
through
the
judicial
system.
The
U.S.
exchange
filed
for
what’s
known
as
an
interlocutory
appeal
that
raises
a
narrow
point
of
legal
disagreement
and
seeks
to
get
it
considered
on
its
own,
in
this
case
by
the
U.S.
Court
of
Appeals
for
the
Second
Circuit.
Recently,
a
federal
judge
had
denied
Coinbase’s
effort
to
get
the
SEC
case
against
the
company
thrown
out
before
trial,
and
now
Coinbase
is
formally
asking
the
court
to
weigh
whether
the
SEC
can
treat
a
digital
asset
transaction
as
an
investment
contract
if
it’s
not
connected
to
any
legal
obligation
from
the
asset’s
original
issuer.
Coinbase
argued
in
its
appeal
request
that
the
use
of
the
so-called
Howey
test
on
cryptocurrency
assets
by
the
SEC
has
left
a
murky
understanding
of
what
makes
a
security.
“The
application
of
Howey
to
digital
asset
transactions
raises
hard
questions,”
Coinbase
argued.
“That
members
of
Congress,
senators
and
regulatory
agencies
have
divided
in
answering
them
bespeaks
the
difficulty
of
the
subject
matter,
and
the
divergent
judicial
outcomes
illustrate
the
point.”
Such
appeals
are
typically
longshots,
as
the
SEC
found
out
when
it
filed
a
similar
request
in
its
own
case
against
Ripple
and
was
denied.
But
if
this
appeal
process
were
granted,
the
question
could
move
the
industry
one
step
closer
to
what
could
eventually
be
a
U.S.
Supreme
Court
ruling
that
settles
the
matter
permanently.
When
asked
for
comment
on
the
attempted
appeal,
an
SEC
spokesman
said
that
“any
response
will
be
made
in
public
filings
to
the
court.”
Investment
contracts
are
securities
regulated
by
the
SEC,
so
if
a
crypto
transaction
qualifies,
it
belongs
in
the
agency’s
jurisdiction
and
should
be
properly
registered
under
the
law.
The
regulator
has
argued
before
lawmakers
and
courts
that
the
vast
majority
of
digital
assets
are
securities,
but
Coinbase
and
others
from
the
industry
contend
that
once
the
asset
hits
secondary
markets
and
is
no
longer
connected
to
the
business
that
issued
it,
the
token
is
beyond
the
SEC’s
legal
reach.
Answering
this
dispute
would
be
fundamental
for
the
U.S.
crypto
sector.
Judge
Katherine
Polk
Failla,
of
the
U.S.
District
Court
for
the
Southern
District
of
New
York,
ruled
last
month
that
the
SEC
had
demonstrated
enough
of
its
legal
premise
in
its
accusations
against
Coinbase
that
the
court
would
move
forward
with
most
of
the
case.
Coinbase’s
new
appeal
of
one
piece
of
that
decision
would
have
to
be
accepted
by
Judge
Failla
and
the
Second
Circuit
in
order
to
move
forward.
If
they
take
it
up,
the
rest
of
the
case
stays
in
place
in
Failla’s
court
as
the
regulator
and
the
company
move
toward
trial.
Coinbase’s
case
is
considered
one
of
the
decisive
legal
battles
that
could
determine
the
course
of
the
industry
in
the
U.S.
So
far,
the
SEC
has
had
a
mixed
record
of
some
big
losses
(such
as
against
Ripple)
and
some
significant
gains
(such
as
in
its
case
against
Terraform
Labs
and
in
an
insider-trading
case
connected
to
Coinbase).
UPDATE
(April
13,
2024,
00:20
UTC):
Adds
additional
detail.
UPDATE
(April
13,
2024,
02:28
UTC):
Adds
response
from
the
SEC.
