Coinbase files fresh reply in legal battle with SEC after ETH ETF and FIT21 approval

Coinbase (COIN) issued a response on Friday to its initial interlocutory appeal for answers regarding securities question in battle that has lingered with the Securities & Exchange Commission (SEC).

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Coinbase responds to SEC

Crypto exchange Coinbase filed a response to the SEC's comment on its interlocutory appeal request on Friday. The exchange continues to probe for an appeal with the court, stating that the question asked holds vital ground for the entire cryptocurrency industry.

“Certification is warranted to resolve the novel and controlling question of law presented, to guide the conduct of this litigation, and to bring much-needed clarity to the burgeoning crypto industry” the response states.

An interlocutory appeal is a party's application to an appellate court challenging a non-final trial court order that decides an issue but does not result in a final judgment.

Coinbase initially requested an appeal to the US Court of Appeal Second Circuit last month, seeking to know whether the SEC may regulate “investment contracts” digital asset transactions that don’t involve anything contractual. This question, according to the exchange, is key in these defining times for the entire crypto industry.

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“We’re asking to take this key legal issue up on appeal earlier than normal because it's critical to the crypto industry. Earlier this week the House recognized the need for clear rules, and we’re seeking clarity in the Courts as well,” said Paul Grewal, Chief legal officer at Coinbase.

The SEC earlier released a counter-response to Coinbase request for an interlocutory appeal on May 10, stating that at least some of the transactions on the exchange platform and through related services constituted investment contracts and that the question presented by Coinbase was unnecessary.

The tables however may be turning against the SEC, especially with the passing of the FIT21 bill in the House of Representatives and the regulator approving spot ETH ETFs on Thursday.

With many suggesting ETH's potential classification as a security ending with the ETF approval, the courts may be forced to look into the appeal requested by Coinbase.

Read more: SEC approves spot Ethereum ETFs after shocking U-turn

The interlocutory appeal will require acceptance from the appellate court. Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York previously denied Coinbase's motion to have the SEC's initial lawsuit against the exchange dismissed. The exchange also lost a case to the Supreme Court on Thursday over its 2021 Dogecoin sweepstakes.

In conclusion, Coinbase has said it would exercise patience until it gets clarity from the SEC over crypto assets regulations.

“We’re committed to seeing this through no matter how long it takes to get clarity for the entire industry and push back against overzealous regulators. It’s what the 52 million Americans who own crypto deserve," said Paul Grewal.