Coinbase Claims Cryptocurrency on Its Platform is Not Securities

It is reported that according to the latest amicus curiae briefing submitted by Coinbase, the cryptocurrency exchange claimed that the cryptocurrency on its platform was not securities, and that Coinbase would also be willing to list securities products if the United States Securities and Exchange Commission gave appropriate guidance and regulations. Coinbase wrote in the briefing: “The United States Securities and Exchange Commission believes that digital assets are qualified as securities because they belong to investment contracts, but for encrypted assets, the legal term lacks two basic attributes. They are neither contracts nor investments.” (coindesk)

Coinbase: If the SEC makes rules, it is willing to list securities

Cryptocurrency has been the talk of the town for quite some time now, yet there is still a great deal of ambiguity surrounding it. The term “securities” has been the subject of intense debate since the inception of digital currencies. Amid all the confusion, one of the biggest cryptocurrency exchanges in the world, Coinbase, has claimed that the cryptocurrency on its platform is not securities. In the latest amicus curiae briefing submitted by Coinbase, the exchange stated that it would also be willing to list securities products if the United States Securities and Exchange Commission (SEC) gave appropriate guidance and regulations.

The Legal Status of Cryptocurrencies

The legal status of cryptocurrencies has been a topic of contention among regulators worldwide. Cryptocurrencies are not backed by any centralized authority, which makes it challenging for regulators to decide who should be responsible for regulating and enforcing them. The lack of a clear legal definition of what cryptocurrencies are has created considerable confusion among traders and investors alike.

What Are Securities?

Securities are financial instruments that denote ownership in a company or an agreement to repay borrowed capital with interest over a fixed time period. The SEC regulates securities in the US by ensuring fair and transparent markets, enforcing federal securities laws, and protecting investors.

The SEC’s View on Digital Assets

The SEC views digital assets as securities because they are part of an investment contract. However, for cryptocurrencies, it seems that the legal term lacks two basic attributes. Cryptocurrencies are not contracts, nor are they investments. Coinbase has relied upon this ambiguity of the law to argue that cryptocurrencies should not be classified as securities.

The Latest Coinbase Briefing

In the latest amicus curiae briefing submitted by Coinbase, the exchange argues that cryptocurrencies on its platform should not be deemed securities. Coinbase claims that their platform does not fit the traditional description of an investment contract, making a securities classification inappropriate.
Furthermore, Coinbase states that their platform does not satisfy the Howey Test, a test used by the SEC in determining an investment contract. The Howey Test is utilized to determine whether a particular transaction is deemed an “investment contract.” Under the test, a security is present when there is an investment of money, in a common enterprise, with an expectation of profits solely from the efforts of others. Coinbase argues that this test does not apply to their platform, as their traders make their own investment decisions.

Coinbase’s Willingness to List Securities Products

Despite their claims that cryptocurrency on their platform is not securities, Coinbase has stated that they would be willing to list securities products if provided with clear guidance from the SEC. The exchange believes that creating a regulatory framework for digital assets would provide greater clarity for investors and traders.

The Future of Cryptocurrency

The future of cryptocurrency remains uncertain, with various entities grappling to decide on the legal status of digital assets. Coinbase’s latest briefing is undoubtedly a significant step towards a clearer regulatory framework for cryptocurrencies. However, until such a framework is established, the legal status of virtual currencies will remain unclear, leading to confusion among traders, investors, and regulators alike.

Conclusion

In conclusion, Coinbase’s latest briefing has argued that cryptocurrency on their platform is not securities, citing the ambiguity of the legal definition of cryptocurrency. The SEC views digital assets as securities, but Coinbase has argued that their platform does not fit the traditional description of an investment contract. The cryptocurrency exchange has further stated that they would be willing to list securities products if the SEC provided clear guidance on the matter. Despite this, the legal status of cryptocurrencies continues to be uncertain. Until greater clarity is provided for the regulation of digital assets, confusion is likely to persist.

FAQs

1. What is Coinbase?
Coinbase is one of the largest cryptocurrency exchanges in the world, allowing traders and investors to buy, sell, and trade cryptocurrencies.
2. What does the SEC do?
The SEC regulates securities in the US by ensuring fair and transparent markets, enforcing federal securities laws, and protecting investors.
3. What is the Howey Test?
The Howey Test is a test used by the SEC to determine whether a particular transaction is deemed an “investment contract.”