Affiliation of Securities Regulators Argues Against Treating Digital Assets as Special
The North American Securities Administrators Association (NASAA), an association consisting of securities regulators, has filed an amicus brief in a New York district court case involving the Securities and Exchange Commission (SEC) and Coinbase. NASAA supports the SEC in its lawsuit against Coinbase for allegedly operating as an unregistered exchange, broker, and clearing agency. NASAA argues that digital assets should not be treated as special and that the established legal framework should be applied to them. It cites the Howey Test, a Supreme Court case from 1946, which the SEC often uses to determine if transactions are investment contracts subject to securities laws.
NASAA asserts that the SEC’s position on certain digital assets being investment contracts is within the bounds of established law and not extraordinary. It argues against assertions that the major questions doctrine, which requires clear congressional authorization for issues of major national significance, can be applied to crypto. NASAA states that digital assets do not have a significant economic use case beyond speculation and therefore cannot be compared to cases related to the major questions doctrine.
NASAA Rejects Crypto Legislation and Emphasizes Existing Law Enforcement
In its brief, NASAA also rejects the notion that new legislation is necessary for regulating digital assets. It argues that the SEC is not creating new policy but rather enforcing existing law. While lawmakers have introduced bills to regulate crypto, none have been enacted yet. NASAA suggests that Congress may eventually legislate a comprehensive regulatory framework for digital assets but acknowledges that it is also possible they may not do so.
State Securities Regulators’ Actions Against Crypto Firms
NASAA represents state and provincial securities regulators in the U.S., Canada, and Mexico with a mission to protect investors from fraud and abuse. It is worth noting that some state securities regulators have taken legal actions against Coinbase, Nexo Capital, and other firms over the past year.
Hot Take: NASAA Calls for Fair Treatment of Digital Assets
NASAA argues that digital assets should not be treated as special and should be subject to the same regulatory obligations as other participants in the securities markets. It supports the SEC’s lawsuit against Coinbase and asserts that the SEC’s position on digital assets being investment contracts is well within established law. NASAA also pushes back against the application of the major questions doctrine to crypto, stating that digital assets do not have significant economic use cases beyond speculation. Overall, NASAA emphasizes the need for fair and consistent regulation in the crypto industry.
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