The North American Securities Administrators Association (NASAA), representing state and provincial securities regulators in the U.S., Canada, and Mexico, has filed an amicus brief in support of the U.S. Securities and Exchange Commission (SEC) in its lawsuit against cryptocurrency exchange Coinbase. The move underscores deepening regulatory divisions over the classification of digital assets.
NASAA’s Position: Crypto Assets Are Securities Under Existing Law
In its brief submitted to the U.S. District Court for the Southern District of New York, NASAA backed the SEC’s argument that certain crypto assets listed on Coinbase constitute securities and are therefore subject to the Commission’s regulatory authority. The organization specifically urged the court to apply the Howey test, a decades-old legal standard used to determine whether an asset qualifies as a security, to cryptocurrencies. NASAA rejected Coinbase’s push for a new, bespoke regulatory framework, stating that digital assets should not be treated as “somehow special.”
The association further argued that the SEC’s enforcement action is consistent with its “longstanding public position” and existing securities laws. It called on the court to “decline to rewrite the Howey test to allow digital asset enterprises to evade regulatory oversight.”
Background: SEC vs. Coinbase
The SEC filed its lawsuit in early June 2023, accusing Coinbase of operating an unregistered national securities exchange, broker, and clearing agency, and of allowing trading in crypto assets that qualify as securities without proper registration. In August, Coinbase moved to dismiss the case, claiming the SEC had “overstepped its statutory authority,” “abused its discretion,” and “abandoned its own earlier interpretations of securities laws.” The SEC countered in September by urging a federal judge to reject the dismissal motion. NASAA’s amicus brief, filed in October, now adds significant weight to the SEC’s legal position.
Implications for Crypto Regulation
This case represents a pivotal moment for cryptocurrency regulation in the United States. A victory for the SEC could lead to a broad reclassification of crypto tokens as securities, subjecting exchanges to stricter registration and compliance requirements. Conversely, if Coinbase prevails, it may pressure Congress to enact tailored legislation for digital assets. Market participants, including investors and exchanges, are closely watching the case, while other regulators, such as the Commodity Futures Trading Commission (CFTC), have also weighed in on jurisdictional issues. The court’s decision, expected in late 2023 or early 2024, will likely shape the future landscape of crypto enforcement.