The SEC Argues Cryptocurrencies Lack Inherent Value in Coinbase Lawsuit
The Securities and Exchange Commission (SEC) is facing pushback from Coinbase and the crypto community after arguing that cryptocurrencies have no “innate or inherent value” in its case against the exchange. The SEC filed a motion to reject Coinbase’s claim that cryptocurrency trading does not fall under investment contracts, using the legal doctrine known as the “Howey Test” to justify its position. While the SEC has long argued that various investments can be regulated as investment contracts, it contends that many cryptocurrencies lack inherent value unlike the tokens cited in its lawsuit.
However, Coinbase’s chief legal officer, Paul Grewal, dismissed the SEC’s arguments, stating that they would mean everything from Pokemon cards to stamps would also be considered securities. Grewal referred to a recent questioning of Gary Gensler by Rep. Ritchie Torres, where Torres emphasized that this interpretation is not supported by law. Ripple Labs’ chief legal officer, Stuart Alderoty, also criticized the SEC’s argument on Twitter.
Value Debate Continues
The debate over the value of cryptocurrencies has been ongoing since their inception. Unlike fiat currencies backed by governments, tokens do not have legal support. Instead, their value is determined by market forces of supply and demand. The SEC’s lawsuit against Coinbase includes several altcoins labeled as unlicensed securities, such as Solana, MATIC, and Cardano. Developers and Coinbase have contested these designations.
Hot Take: Lack of Inherent Value
The SEC’s argument that cryptocurrencies lack inherent value has been met with skepticism by Coinbase and others in the crypto community. While it has used the Howey Test to regulate various investments as investment contracts, the assertion that cryptocurrencies have no innate value is seen as questionable. The ongoing debate over the value of cryptocurrencies highlights the unique nature of these digital assets, which derive their value from market dynamics rather than government backing. As the legal battle between Coinbase and the SEC continues, the outcome will have significant implications for the regulation and classification of cryptocurrencies.
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