In a New York federal court, a Coinbase lawyer argued against classifying cryptocurrency as securities, likening owning digital assets to buying Beanie Babies. The attorney, William Savitt, emphasized the distinction between purchasing shares in a company and acquiring collectibles like Beanie Babies. This argument was presented in defense of dismissing a lawsuit filed by the Securities and Exchange Commission (SEC) in June 2023.
During the court proceedings, Savitt drew parallels between cryptocurrency and collectible plush toys. He asserted that individuals who invest in digital assets do not hold any ownership stake in the underlying companies, distinguishing them from traditional securities like stocks or bonds. The lawyer’s analogy aimed to highlight the unique nature of cryptocurrency and justify its classification as a distinct asset class.
This legal stance by Coinbase reflects a recurring comparison between cryptocurrency and Beanie Babies. The attorney previously emphasized this analogy in a motion filed in August 2023, asserting that the sale of digital assets is comparable to transactions involving real estate, new development condominiums, American Girl Dolls, Beanie Babies, or baseball cards. This argument underscores Coinbase’s position that cryptocurrency should not be treated as securities subject to the same regulatory framework.
Legal experts anticipate that U.S. District Judge Katherine Polk Failla may take two to six weeks to reach a decision on the case. The outcome will have significant implications for how cryptocurrency is regulated and classified in the United States. If the court accepts Coinbase’s argument, it could set a precedent for treating digital assets more like collectibles than traditional securities.
The SEC filed the lawsuit against Coinbase, alleging that the platform operated its cryptocurrency trading platform as an unregistered national securities exchange, broker, and clearing agency. Additionally, the commission charged Coinbase with failing to register the offer and sale of its crypto asset staking-as-a-service program. The outcome of this case will contribute to shaping the regulatory landscape for cryptocurrency exchanges and their compliance with securities laws.
Coinbase’s comparison of cryptocurrency to Beanie Babies aims to emphasize the speculative and non-equity nature of digital assets. By drawing parallels with collectibles, the company seeks to distance itself from the regulatory requirements associated with traditional securities, arguing that cryptocurrency transactions involve ownership of the assets themselves rather than shares in underlying companies.
This legal dispute highlights the evolving challenges surrounding the regulatory framework for cryptocurrencies and the need for clear guidelines to address their unique characteristics. As the crypto industry continues to grow and attract mainstream attention, legal battles like these play a crucial role in shaping the legal landscape and determining how digital assets are treated under existing securities laws.