In a recent development, the North American Securities Administrators Association (NASAA) has come forward to assert that digital assets should not receive any preferential treatment, challenging claims that the legal actions against Coinbase, a publicly traded cryptocurrency exchange, are in any way unique or extraordinary.
In an official filing submitted on October 10 to the United States District Court for the Southern District of New York, the NASAA extended its support to the U.S. Securities and Exchange Commission (SEC), which had previously filed a lawsuit against Coinbase, accusing the platform of violating federal securities laws. Coinbase, in its defense, argued that the digital assets and services it provides should not be categorized as securities and accused the SEC of overreaching its jurisdiction.
Vincente Martinez, General Counsel for the NASAA, emphasized that the SEC’s stance in this case aligns with the agency’s established position and is well within the boundaries of existing legal norms. Martinez underlined that the Howey test, a crucial element in the lawsuit, is a flexible criterion designed to encompass evolving technological advancements within the securities markets, including those involving blockchain-based securities, an assertion that echoes earlier SEC statements.
“The Court should reject Coinbase’s attempt to narrow and misapply the established legal framework to avoid regulatory obligations, treating digital assets as somehow special,” Martinez stated.
Martinez also challenged Coinbase’s invocation of the “major questions doctrine,” which posits that executive agencies like the SEC require congressional approval for issues of significant political or economic importance. He disputed Coinbase’s portrayal of the “digital asset industry” as a substantial component of the American economy, noting the lack of practical economic utility or widespread adoption for the majority of digital assets, except for speculative purposes.
“In essence, digital assets are not economically useful as a class of assets,” Martinez asserted, adding that Coinbase has exaggerated the size and importance of this “industry,” particularly in terms of oversight by securities regulators.
The NASAA’s filing aligns with the SEC’s request for the judge to dismiss Coinbase’s motion to have the SEC lawsuit thrown out.
The NASAA comprises 68 members, including securities regulators from all 50 U.S. states, in addition to regulators from Canada, Mexico, and various U.S. territories. Martinez emphasized that NASAA and its members hold a substantial interest in the ongoing legal case.
