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Seeking Alpha 2023-06-07 13:21:30

Coinbase willing to take fight with SEC to the Supreme Court - report

Coinbase Global ( COIN ) is prepared to take its battle with the U.S. Securities and Exchange Commission to the country's highest court, its top lawyer said, according to a media report. This week, in two separate suits, the SEC alleged that the U.S. cryptocurrency exchange, and its rival Binance, the world's largest crypto exchange, violated securities laws because the agency considers many crypto assets to be securities, not currencies. Therefore, the assets need to be registered and the exchanges that facilitate trading also are required to be registered, according to the SEC's argument. "If it takes going to the Supreme Court, that's what we're prepared to do," Coinbase ( COIN ) Chief Legal Officer Paul Grewal said in an interview with Bloomberg. "I think that every court that looks at this issue is going to conclude the SEC has fundamentally gotten this wrong." Meanwhile, Coinbase ( COIN ) has been seeking clearer guidance from regulators. In April, the company sued the SEC in its effort to get a "yes" or "no" to its July 2022 petition asking the regulator to use its formal rulemaking process to provide guidance to the crypto industry. In commenting on the suit via Twitter, Coinbase CEO Brian Armstrong again called for clarity around crypto rules in the U.S. "There is no path to 'come in and register' — we tried, repeatedly — so we don't list securities. We reject the vast majority of assets we review," he said . Regarding Coinbase's ( COIN ) suit against the SEC, a U.S. court of appeals issued an order asking the SEC to provide within seven days a letter answering whether it has denied the petition and how much more time it would need to reach a decision. After the SEC's suit against Coinbase ( COIN ), BTIG analyst Isaac Boltansky says there's "no viable argument to be made suggesting that this is positive for Coinbase, but we do believe it should be viewed as a positive step toward clarity for the whole digital ecosystem." Of the crypto lawsuits outstanding, "this one feels uniquely well positioned to be ultimately heard by the Supreme Court," Boltansky wrote in a note to clients. The Ripple case has procedural nuances that make it less ideal for bringing judicial clarity and the Binance lawsuit could add layers if the Justice Department also brings charges. The questions about crypto regulation would best be addressed by Congress rather than the courts, as it could take "three to five years for judicial clarity that may be both narrower and murkier," Boltansky wrote in a note to clients. While Congress remains deeply divided along partisan lines, Armstrong sees a glimmer of hope for a legislative resolution, pointing to the McHenry Thomson draft bill that came out last week. "This is the start of something really useful, which is a clear market structure for crypto clear delineation between what the CFTC and the SEC are supposed to do," he said on CNBC Wednesday. Dear readers: We recognize that politics often intersects with the financial news of the day, so we invite you to click here to join the separate political discussion. More on SEC and Crypto: SEC versus crypto: Regulatory clarity or confusion? SEC sues Coinbase for operating as unregistered broker SEC's Gensler defends crypto regulation at House oversight hearing SEC takes aim at crypto exchanges after reopening proposed rule SEC Beaxy, market makers in crypto clampdown

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