Coinbase, a top global crypto exchange, is once again butting heads with the U.S. Securities and Exchange Commission (SEC) about what exactly defines a security. Coinbase argues that the SEC is overreaching with its current view.
At the heart of the issue is the SEC’s opinion. They think that if someone buys something hoping its value will go up, it’s essentially an investment contract, and therefore, a security. Coinbase says this viewpoint stretches the traditional understanding of securities laws way too far.
The main point Coinbase is making is about who gets to decide. They believe that such a broad definition of securities shouldn’t just be up to the SEC. Any major changes to securities laws should come from Congress, making sure it’s in line with the bigger picture they have in mind.
This back-and-forth between Coinbase and the SEC is a snapshot of a bigger conversation in the crypto world about the need for clear rules. With digital currencies and technologies changing so quickly, defining what a security is becomes super important. And it highlights the need for regulations that get the unique world of crypto, but without holding back new ideas.