SEC Warns Coinbase Against Reinterpreting The Howey Test Amid Legal Battle
US Judge questions SEC on crypto rules, possibly leading to new views on cryptocurrencies like XRP as non-securities.
A recent court case between the SEC and crypto exchanges took an interesting turn. US Judge Katherine Polk Failla questioned the SEC's arguments against Coinbase and cryptocurrencies like XRP. XRP supporter Bill Morgan thinks this could mean cryptocurrencies might not be considered securities in the US.
In the hearing, Judge Failla asked the SEC for clearer definitions of “securities” and “staking”. The SEC criticized Coinbase, saying it's creating a “new version of the Howey Test,” a key legal standard for determining what counts as a security.
The SEC warned Coinbase not to change the Howey Test. The SEC's lawyer argued that this goes against the regulations set in 1934. But Coinbase argued against the SEC's claims, saying they are not reinterpreting the Howey Test. Instead, they suggested the SEC is stretching the test's application to fit the situation.
Fox Business reporter Eleanor Terrett noted Judge Failla’s interest in previous rulings on similar cases like LBRY and XRP. These cases influence the current Coinbase lawsuit. Morgan pointed out that, given Judge Torres’ view of XRP as a non-security and the direction of the Coinbase lawsuit, it's becoming accepted that these tokens are not securities.
