On October 10, the North American Securities Administrators Association (NASAA) supported the SEC via filing in the US District Court, arguing that digital assets do not require special treatment when it comes to applying securities laws.
Regulators from an association of North American securities pleaded that digital assets should not be seen as “somehow special,” nor should action against Coinbase be seen as “novel or extraordinary.”
The SEC sued Coinbase in June, charging it with violating federal securities law. The digital assets and services provided by Coinbase did not qualify as securities, and the agency was overreaching, argued Coinbase.
Vincente Martinez, NASAA’s general counsel, argued that “The SEC’s theory in this case is consistent with the agency’s longstanding public position, the positions advanced by state securities regulators, and even the understanding of digital asset issuers.” It further added that the SEC’s position is neither “novel or extraordinary.”
The agency contended that the application of established law to digital assets by the SEC does not require express authorization from Congress. The judge’s interpretation of the Howey test is anticipated to be one of the lawsuit’s main points of contention. As per Coinbase, digital assets don’t meet every requirement of the test.
Martinez said, “The Court should reject Coinbase’s attempt to narrow and misapply the established legal framework in order to avoid being subject to the same regulatory obligations as all other participants in the Nation’s securities markets.”