The North American Securities Administrators Association (NASAA) has expressed its support for the United States Securities and Exchange Commission (SEC) in its legal dispute with Coinbase. This statement has been filed with the United States District Court for the Southern District of New York. NASAA contends that digital assets should not be treated as unique and should be subject to existing securities laws, just like other securities and related assets.

In June, the SEC initiated legal action against Coinbase, accusing the cryptocurrency exchange of violating federal securities regulations. In response, Coinbase argued that its services and digital assets should not be classified as securities, asserting that the SEC had exceeded its regulatory authority.

NASAA’s General Counsel, Vincente Martinez, believes that the SEC’s position aligns with established legal norms and is not a groundbreaking case. He stated, “The SEC’s theory in this case is consistent with the agency’s longstanding public position and well within the bounds of established law.”

A critical aspect of the lawsuit will be the application and interpretation of the Howey test. This legal test determines whether an investment contract qualifies as a security. Coinbase argues that digital assets do not meet all the criteria of this test and, therefore, should not be considered securities.

Martinez emphasized that the court should reject Coinbase’s attempt to narrow and misapply the established legal framework to avoid the same regulatory obligations as other participants in the nation’s securities markets. He also criticized Coinbase for portraying the cryptocurrency industry as a significant component of the American economy, asserting that, with very few exceptions, digital assets cannot be used to fulfill government obligations such as fees or taxes.