Court Clash Over Crypto Classification: Coinbase vs. SEC and Other Weekly Crypto Developments
Summary:
Coinbase and the U.S. Securities and Exchange Commission debated in court over Bitcoin's 13 tokens' classification. Judge Failla showed a deep understanding of the crypto industry and concerns over limiting the SEC's power to regulate it. The week also saw VanEck announcing the closure and liquidation of its Bitcoin strategy exchange-traded fund, the IRS relaxing rules on crypto transactions over $10,000, daily volumes of Bitcoin ETFs surpassing those of all ETFs launched in 2023, and Core Scientific's exit from bankruptcy and upcoming share relisting.
On January 17th, Coinbase locked horns with the U.S. Securities and Exchange Commission in a courtroom showdown. The aim was to ensure Bitcoin's 13 tokens remained classified. It was during this hearing that Judge Katherine Polk Failla demonstrated an in-depth understanding of the crypto industry and questioned the SEC lawyers as to why these tokens should be deemed as securities. This case, instigated by the SEC against Coinbase in June 2023, is one of the largest legal battles the crypto industry has seen.
Coinbase's legal team took a stand against cryptos and crypto communities being tagged as a "common enterprise" as well as comparing these virtual tokens to real-world stocks. Their protest is rooted in the belief that token purchases lack the same kind of rights associated with stocks. Whether the case will be allowed to continue or be dismissed by motion from Coinbase is still undecided by Judge Failla. Interestingly, Judge Failla has past experience dismissing crypto-related cases, such as the case against Uniswap in 2013 who were accused of selling "scam tokens."
Judge Failla is aware of the impact her decision will have on the industry. During the proceeding, she voiced her concerns over limiting the SEC's power to regulate the crypto industry and hesitated over labeling a new technology that still waits for regulatory clarity from Congress. These remarks indicate that the court case outcome lies in the hands of someone who understands its potential impact on businesses, regulation, and a multitude of individuals both within and outside of the United States.
This week's Crypto Biz edition will also provide insights into VanEck's Bitcoin ETFs transformation, new IRS rules for cryptos, performance of Bitcoin ETFs and the re-listing of Core Scientific shares.
Asset management company, VanEck, announced on January 17th that it will be shutting down and cashing out its Bitcoin strategy exchange-traded fund, not long after its launch. This move was approved by its board of trustees and the Bitcoin Strategy ETF will be taken off the Cboe BZX Exchange, where it has been listed since November 2021. This decision was made a week after VanEck received a green light from the U.S. SEC to list shares of its spot Bitcoin ETF.
Also, U.S. businesses are no longer obliged to report any crypto transactions exceeding $10,000 to the Internal Revenue Service (IRS). This change will remain in place until the tax agency makes the necessary regulatory framework available. With Bitcoin ETFs hitting 3x the daily volume of all ETFs launched in 2023 combined and Bitcoin miner Core Scientific set for a share relisting following its exit from bankruptcy, there are signs of major shifts in the crypto world.
Published At
1/20/2024 12:00:00 AM
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