- Coinbase is requesting a U.S. court to rule on its demand for SEC documents concerning the classification of ether as a security
- The case follows Coinbase’s earlier lawsuit against the SEC and FDIC regarding the Freedom of Information Act (FOIA) request
- The outcome could significantly impact regulatory clarity and the broader cryptocurrency industry
Coinbase has asked a U.S. federal court to force the Securities and Exchange Commission to turn over documents regarding the application of securities laws to cryptocurrencies, specifically those related to ether.
The move represents the latest bid by the biggest U.S. cryptocurrency platform to gain clarity on whether ether and other digital assets are securities.
Coinbase Pushes for SEC Transparency
Coinbase filed the motion for partial summary judgment in the U.S. District Court for the District of Columbia in a suit filed in June against the SEC and the Federal Deposit Insurance Corporation.
That case was filed after the agencies denied a Freedom of Information Act request seeking internal and external communications related to the SEC probes into whether some cryptocurrencies, such as ether, are securities.
Whether ether is a security has become the most pivotal test for the cryptocurrency industry. The same question was at the heart of a lawsuit filed by blockchain firm ConsenSys against the SEC after, in March 2023, the commission launched an investigation into Ethereum 2.0. It then shut the investigation, but the larger issue remained open.
The Coinbase lawsuit seeks documents connected to two now-closed probes: one by the Securities and Exchange Commission that involved Enigma MPC, a data encryption startup, and another that involved Zachary Coburn, creator of the platform EtherDelta, which the agency labeled an unregistered exchange. Both have settled their cases with the SEC in previous years.
Initially, the SEC had argued that it denied Coinbase’s FOIA request because of legal exemptions, and more recently, it appeared to have suggested otherwise.
The commission now says that it may take up to three years to produce the documents requested in the FOIA request, further undermining the effort by the exchange to gain some clarity on regulatory guidelines, Coinbase’s Chief Legal Officer, Paolo Grewal, said.
Conclusion
How would you feel about this situation? My feeling regarding this delay from the SEC is that such a holdup will be seriously discouraging for growth in the crypto sector and will contribute to nothing but uncertainty for investors.
