Digital Assets Should Not Be Treated as Special, Argues North American Securities Regulators
The North American Securities Administrators Association (NASAA) has filed a document in support of the US Securities and Exchange Commission (SEC) in its ongoing lawsuit against Coinbase. NASAA argues that digital assets should not be given special treatment when it comes to applying securities laws. The association’s general counsel, Vincente Martinez, stated that the SEC’s position is consistent with established law and not novel or extraordinary. NASAA also believes that the SEC does not require explicit congressional authorization to apply existing law to digital assets.
Howey Test and Flexibility in Securities Markets
One of the key aspects of the lawsuit revolves around the judge’s interpretation of the Howey test, which determines what qualifies as an investment contract. Coinbase has argued that digital assets do not meet all the requirements of this test. However, Martinez asserts that the Howey test is flexible enough to encompass technological advancements in securities markets, including blockchain-based securities. He urges the court to reject Coinbase’s attempt to narrow and misapply the established legal framework.
Crypto Impact Overstated
Martinez also criticizes Coinbase’s argument invoking the “major questions doctrine,” claiming that digital assets are a significant portion of the American economy. He argues that digital assets do not have practical economic use cases or widespread adoption beyond speculation. Martinez states that digital assets are not widely accepted for goods or services, nor can they be used to satisfy government obligations such as fees or taxes. He emphasizes that Coinbase overstates both the size and significance of the digital asset industry.
NASAA Supports SEC Lawsuit
NASAA, consisting of 68 members including securities regulators from all 50 US states, Canada, Mexico, and US territories, has joined the SEC in urging the judge to dismiss Coinbase’s attempt to have the lawsuit dismissed. Martinez asserts that NASAA and its members have a substantial interest in the case.
Hot Take: Digital Assets Should Be Subject to Existing Securities Laws
The North American Securities Administrators Association argues that digital assets should not be treated as special and should be subject to existing securities laws. In supporting the SEC’s lawsuit against Coinbase, NASAA asserts that the SEC does not need explicit congressional authorization to apply established law to digital assets. The association also emphasizes that digital assets do not have significant practical economic use cases or widespread adoption beyond speculation. NASAA urges the court to reject Coinbase’s attempt to narrow and misapply the legal framework and emphasizes its substantial interest in the case.
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