District Judge Katherine Polk Failla approved the appeal on January 7. It will determine if certain digital assets on Coinbase are securities under U.S. law. The court will also address whether these transactions require investment contracts based on the Howey test.
Until the appeal is decided, the lawsuit’s proceedings are on hold. Coinbase argues that the tokens on its platform don’t meet the legal definition of securities. The company says token issuers owe no obligations to buyers, failing the Howey test.
Judge Failla acknowledged the complexity of the issue and said it presents room for differing opinions. She believes resolving this now could speed up the case’s conclusion.
The SEC brought its case against Coinbase in 2023, and charged the firm with trading at least 13 tokens it maintained should have been registered as securities. Coinbase criticized the agency for greenlighting its public listing before challenging its practices.
Separately, Coinbase won a New York regulatory license on the same day that will let the company offer new products in the state. It’s also joined calls that federal efforts are overstepping their authority to limit what banks can do with crypto.
As Congress debates clearer digital asset rules, cases like this could shape the future of U.S. crypto regulations.
