Crypto exchange Coinbase has petitioned a federal court for permission to file a friend of the court ("amicus") brief in the ongoing lawsuit between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs.
Coinbase joins the Blockchain Association, an industry lobbyist group, SpendTheBits, a crypto payments app that uses XRP and John Deaton, a lawyer, in hoping to shore up Ripple's case against the SEC, which sued Ripple at the end of 2020 on allegations it sold XRP as an unregistered security.
The exchange highlighted whether the SEC provided "fair notice" prior to bringing its enforcement action, taking a dig at the common industry complaint that the regulator has not provided clear guidance to businesses in the process.
"Given the absence of SEC rulemaking for the cryptocurrency industry, the question of whether the SEC has given fair notice before bringing an enforcement action against sales of one of the thousands of unique digital assets will often be highly fact-intensive, which makes it particularly ill-suited for adjudication on summary judgment," Coinbase's filing said.
Coinbase similarly argued that the SEC has been inconsistent about its enforcement approach, which creates "uncertainty" for companies in the sector.
"Ripple and others have been the subject of extensive enforcement scrutiny while others – with nearly identical products or services – have apparently been subject to none," the filing said.
Much of the filing focuses on this argument, as well as maintaining the view that the regulator has not engaged in any rulemaking that would "provide the regulatory clarity" companies want.
The filing also targeted the argument that crypto could be treated like traditional securities, saying most cryptocurrencies do not represent ownership stakes or pay dividends the way shares might.
"In addition, existing SEC registration requirements for national securities exchanges are currently unsuitable to the way digital asset platforms operate," the filing said. "Existing SEC requirements, however, only allow broker-dealers to be members of registered securities exchanges, meaning that retail customers can only trade assets on exchanges indirectly by using the services of broker-dealers that charge transaction fees and add intermediation risks that could be avoided on digital asset trading platforms, again to the benefit of customers."
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