In a recent development, Coinbase, a prominent cryptocurrency exchange, has strongly contested the United States Securities and Exchange Commission’s (SEC) classification of cryptocurrencies listed on its platform as securities. In a filing presented to a New York District Court on October 24, Coinbase criticized the SEC’s definition of securities, asserting that it exceeds the boundaries established by U.S. securities laws.

According to Coinbase, the SEC’s jurisdiction is explicitly limited to securities transactions, which do not encompass every form of capital investment. The exchange emphasized that the transactions involving cryptocurrencies on its platform do not fall within the SEC’s regulatory purview unless they constitute ‘investment contracts.’ Coinbase further argued that the SEC’s recent actions reflect a significant expansion of its regulatory scope, an authority that is rightfully within the realm of the U.S. Congress.

Paul Grewal, Coinbase’s chief legal officer, reinforced these claims, emphasizing that the SEC’s definitions lack any restrictive function and consequently impede the clarity required for effective regulation.

This response from Coinbase is a part of its ongoing legal battle with the SEC, which initiated a lawsuit on June 6, alleging that Coinbase breached U.S. securities laws by listing specific tokens without proper registration. In defense, Coinbase filed a motion on June 29, citing the SEC’s alleged abuse of power and violation of its due process rights.

The case, currently overseen by Judge Katherine Polk Failla, might progress to oral arguments involving both Coinbase and the SEC. Ultimately, the judge will decide whether to dismiss the case, request a jury trial, or render a judgment on the matter. This dispute underscores the growing tensions between cryptocurrency platforms and regulatory bodies, highlighting the need for a clear regulatory framework in the rapidly evolving digital asset landscape.