Asserting powers over the $1 trillion crypto industry would be of major significance, just like canceling student debt was, the exchange’s lawyers argue.
A recent U.S. Supreme Court judgment on student debt cancellation aids Coinbase’s fight against charges of operating an unregistered securities venue, lawyers for the crypto exchange argued in a Wednesday legal filing.
On June 6, the Securities and Exchange Commission charged Coinbase with breaching federal securities law. The exchange says the lawsuit is a bid by the regulator to exert “extraordinary wholesale power” over the $1 trillion digital asset industry and represents a breach of powers of the kind judges recently ruled unlawful.
It’s referring to a Supreme Court ruling on June 30, just days after Coinbase sent its opening defense, that the Secretary of Education had overstepped his authority by canceling around $430 billion in student debt, reinforcing a legal doctrine that says that government agencies need clear support from Congress if taking a decision of major economic or political significance.
Coinbase says that “closely analogous” case, cited as Biden v. Nebraska, will have a bearing on its own, because lawmakers still haven’t set out clear rules for crypto.
“Far from granting the ‘clear congressional authorization’ required for the SEC to exercise such authority, Congress has expressly recognized that it has not yet delegated such regulatory authority and is actively considering regulatory structures for the digital asset industry,” said Coinbase’s filing.
U.S. lawmakers are considering a range of digital asset laws, including a recently revived bipartisan bill by Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) which favors giving authority to the Commodity Futures Trading Commission (CFTC) rather than the SEC.
The SEC has argued that digital assets including the tokens tied to Solana (SOL), Cardano (ADA), and Polygon (MATIC) constitute regulated securities, and that the Coinbase knew it was violating the law by failing to register its activities. The regulator has also made similar allegations against rivals Binance and Bittrex. All three companies have denied the charges, arguing the regulator has no jurisdiction.
The parties meet later Thursday for a preliminary hearing in a New York courtroom in a trial that could potentially drag on for years. In a separate case, Coinbase recently scored a Supreme Court victory when judges ruled that a lawsuit taken against the exchange by a user couldn’t proceed until after an appeal.