Coinbase Pushes for Appeal in SEC Case as Ripple Ruling Raises Major Legal Questions

• Coinbase urges the Second Circuit to review its case alongside Ripple’s for clarity on how the Howey Test applies to digital assets.
• Coinbase’s legal battle with the SEC hinges on the interpretation of the Howey Test, impacting the classification of digital assets.
• Judge Failla has yet to rule on Coinbase’s interlocutory appeal request, with the outcome potentially influencing future crypto regulations.

Coinbase has requested an appeal in its ongoing legal dispute with the U.S. Securities and Exchange Commission (SEC). The appeal seeks to address a critical question regarding how the Howey Test applies to digital assets traded on the platform. 

This request, if granted, would allow Coinbase to appeal a key issue in the case before a final decision is reached, potentially speeding up the legal process. Notably, this move follows the SEC’s recent appeal of its own loss in the high-profile Ripple case.

Coinbase’s Appeal Based on Ripple Case Context

Coinbase initially filed for an interlocutory appeal in April, arguing that the court should allow the Second Circuit of Appeals to review the application of the Howey Test to digital assets. 

The Howey Test, based on a 1946 Supreme Court ruling, is used to determine whether an asset qualifies as a security. Coinbase’s legal team emphasized that this question is particularly important due to its broad impact on the industry, as it affects how digital assets are classified under securities law.

The SEC, however, opposed Coinbase’s request in May, arguing that there is no substantial disagreement regarding the law. Despite this, Coinbase has continued to push for an appeal, particularly after the SEC appealed the ruling in the Ripple case. 

Coinbase’s argument is that both cases should be reviewed by the Second Circuit at the same time, as they address similar legal issues regarding digital asset classification.

Judge’s Ruling Still Pending on Coinbase’s Original Appeal

Judge Katherine Polk Failla, who is overseeing the Coinbase case, has yet to rule on Coinbase’s original request. Coinbase believes that resolving this legal question is crucial for the future of digital asset regulations. 

The company has highlighted the SEC’s acknowledgment of the importance of the issue in its Ripple appeal, further strengthening its argument for an interlocutory appeal. Coinbase asserts that the appeals process should provide clarity on the SEC’s position and its impact on the broader cryptocurrency sector.

Coinbase Pushes for Comprehensive Review in Second Circuit

In its most recent filing, Coinbase argued that sending both cases to the Second Circuit together would ensure a more thorough review of the legal questions raised. According to Coinbase, this would give the court a clearer understanding of the regulatory environment for digital assets. 

The company also pointed out that the SEC’s decision to appeal the Ripple case indicates that the issue has wider implications for the industry, making a prompt appellate review necessary. The SEC and Coinbase have not issued further comments on the case. Judge Failla’s decision on whether to grant the interlocutory appeal is still pending.