Potential Outcomes for SEC vs. Coinbase
Coinbase filed a Motion for Interlocutory Appeal in April, asking the court for permission to appeal against the Motion to Dismiss (MTD) decision.
For context, Coinbase filed the Motion to Dismiss in August, arguing that the SEC lacked the statutory authority to regulate crypto exchanges. Judge Katherine Failla denied, for the most part, the Motion to Dismiss, surmising,
“The court concludes that because the well-placed allegations of the Complaint plausibly support the SEC’s claim that Coinbase operated as an unregistered intermediary of securities, Defendants’ motion must be denied in large part.”
If Judge Failla grants the Coinbase Motion for Interlocutory Appeal, Coinbase could cite the SEC vs. Binance in its appeal. Successfully overturning the Motion to Dismiss ruling may end the era of regulation through enforcement and the debate on whether cryptos are securities or commodities.
Significantly, the court rulings rejecting that cryptos are securities give the Commodity Futures Trading Commission (CFTC) greater authority over the US digital asset space.
Will the Crypto Market Benefit from CFTC Oversight?
XRP and the broader crypto market could benefit from greater involvement of the CFTC for three reasons:
- Ending the debate on whether cryptos are securities could pave the way for XRP-spot ETFs and a broader crypto-spot ETF market.
- Support passage of the Lummis and Gillibrand Responsible Financial Innovation Act.
- Reduce the chances of the Digital Asset Anti-Money Laundering Act becoming law.
The Responsible Financial Innovation Act would give the CFTC more authority over the US digital asset space. Moreover, the bipartisan bill would support innovation while protecting US consumers.
In contrast, the Digital Asset Anti-Money Laundering Act proposes anti-money laundering (AML) and countering the financing of terrorism (CFT) frameworks for the US digital asset space. Senators Elizabeth Warren and Roger Marshall drafted the bill with the assistance of the American Bankers Association.
The bill aims to impose banking-style regulations onto the US digital asset space under the purview of the SEC.
In conclusion, court decisions denying cryptos are securities could empower the Commodity Futures Trading Commission (CFTC), fostering a more innovation-friendly environment. This shift might pave the way for XRP-spot ETFs and reduce legislative hurdles.
