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US Federal Judge Grills SEC Over Refusal to Define Simple Questions About BTC, ETH
- The Securities and Exchange Commission spent much of 2024 suing crypto exchanges and products operating within the US, typically over the sale of “unregistered securities”.
- The legal battles have drawn out over the year, with Coinbase itself taking on the SEC and accusing them of being unwilling to draft legislation that provides regulatory clarity.
- The ongoing trial saw the three presiding judges blast the SEC over its refusal to explain several of its policies and positions.
When we look back on 2024 in five years’ time, what will we remember it for? Will it be the flooding of institutions into the industry on the back of spot Bitcoin ETF approval in the United States? Will it be Bitcoin’s run to a new all-time high? Or will it be the regulatory discourse that has plagued the sector for the best part of the year?
The crypto market is seeing a revolution in 2024, with governments globally finally acknowledging that traditional financial regulations simply don’t work for Web3.
But with several regulatory agencies still enforcing old-school policies on a modern market, the crypto industry is at a crossroads. Can governments and regulators evolve? Or will they stifle innovation and stagnate the industry’s progression?
Related: Franklin Templeton and Citigroup Embrace Solana for Cutting-Edge Financial Innovations
SEC in Hot Water as Coinbase Fires Back
The US Securities and Exchange Commission has been one of the crypto community’s most abject opponents throughout 2024. Despite the body approving spot Bitcoin and Ether ETFs, the regulators have been on a litigation rampage, taking numerous blockchain companies to court over the sale of “unregistered securities”.
However, the tables have been turned upon the SEC, with Coinbase suing the regulators over their “regulation by enforcement” stance.
In particular, Coinbase lawyers are seeking regulatory clarity from the SEC regarding certain rules that have remained ambiguous to Web3 businesses in the United States.
And in bullish news for the crypto industry, it appears that the SEC stumbled when asked to clarify perhaps the most pertinent question when it comes to crypto lawsuits – is Bitcoin a commodity?
The SEC’s representation claimed the regulators determine Bitcoin/Ethereum’s status depending on the circumstances – suggesting there are no concrete guidelines for policing cryptocurrency.
Presiding Judges Lambast the SEC Over Lack of Clarity
One of the three judges at the trial, Stephanos Bibas, was astounded at the SEC’s inability to explain its own position.
You won’t even tell us how the Howey Test applies to Bitcoin or Ether…Those tokens have been around for a long time, but you won’t take a position in front of us as to whether Coinbase is safe, if they deal or don’t deal in Bitcoin and Ether.
Judge Stephanos Bibas The crux of the legal battle is the SEC’s refusal to draft new legislation that could both foster Web3 innovation while also protecting customers.
Another judge, Thomas Ambro, addressed this point and accused the SEC of intentionally not releasing its rationale for crypto-related policies.
I don’t see the reasoning…It almost looks, to an outside observer, as if you’re going after [crypto] platforms in a way that will crush the industry without really getting into rulemaking.
Judge Thomas Ambro As the court case comes to a close, there’s a sense of hope among the crypto industry that the SEC will have to start explaining itself – bringing clarity and calm to innovators in the sector.
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Author
Ben Knight
Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.
