It will take time to understand the broader impact of yesterday’s Coinbase/SEC decision.
A legal expert’s view suggests that the decision may be a last straw to bring about long-awaited regulatory clarity.
Arie Heijkoop is a partner at Haynes Boone in the investment management group. She said that Monday’s decision was not surprising. SEC responds to Coinbase’s petition “was lacking in any substance,” He explained, but it is a very high standard for a court to order an agency issue a rule change.
Heijkoop said that the description of the opinion (demonstrating increased understanding in the space) indicates “the SEC may be running out of room to continue evading coming out with a defined position on crypto and digital asset regulation.”
In fact, the SEC is a concern that Judge Stephanos Bibas has noted. “old regulations fit poorly with this new technology, and its enforcement strategy raises constitutional notice concerns.”
Heijkoop explained that Bibas’s opinion in particular seems to be urging the SEC not to confuse coins which operate like securities with those that don’t.
“As the number of crypto products, and how they function, proliferate, if there will ever be crypto regulation handed down, it will likely have to account for those differences,” Haynes Boone has added a new partner.
If there are no more SEC guidelines, this ruling could give defendants some hope to contest crypto enforcement actions. The SEC has not yet issued any guidance on crypto enforcement actions. “a fairly seismic action,” Heijkoop said.
The SEC’s actions against unregistered security offerings could continue, given that the SEC has recognized crypto-products as having securities-like characteristics.
The key question is whether the new agency administration will offer more guidance via regulation and less through litigation.
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