The North American Securities Administrators Association (NASAA) has voiced its support for the U.S. Securities and Exchange Commission (SEC) in its lawsuit against Coinbase, arguing that digital assets should not be treated as “special” and that existing securities laws should apply to them. NASAA’s arguments were detailed in a filing with the United States District Court for the Southern District of New York on October 10th.
The SEC filed a lawsuit against Coinbase in June, accusing the crypto exchange of violating federal securities laws. Coinbase responded by asserting that the digital assets and services it offered did not meet the criteria for securities. NASAA’s general counsel, Vincente Martinez, countered Coinbase’s argument by stating that the SEC’s position is not extraordinary or novel, but rather in line with established law.
In its filing, NASAA argued that the SEC does not need explicit congressional authorization to apply securities laws to digital assets. NASAA highlighted the Howey test as a cornerstone of the lawsuit. The Howey test is used to determine whether an investment qualifies as a security. Coinbase has maintained that digital assets do not satisfy all the requirements of the test. However, Martinez argued that the Howey test was designed to accommodate technological advancements in securities markets, including those involving blockchain-based securities.
Martinez further emphasized that digital assets should not be treated as special or exempt from regulatory obligations. He criticized Coinbase’s claim that the digital asset industry is a significant portion of the American economy, stating that there is little practical economic use case or widespread adoption of digital assets beyond speculation.
NASAA’s filing supported the SEC’s request to deny Coinbase’s motion to dismiss the lawsuit. NASAA is an association comprising 68 members, including securities regulators from all 50 U.S. states, Canada, Mexico, and U.S. territories. Martinez stated that NASAA and its members have a substantial interest in the outcome of this case.
The intervention by NASAA adds further weight to the SEC’s case against Coinbase and suggests that regulators are united in their stance that existing securities laws should be applicable to the digital asset industry. The outcome of this lawsuit will have significant implications for the regulatory landscape surrounding digital assets in the United States.
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