The United States Securities and Exchange Commission (SEC) has been actively pursuing legal actions in the cryptocurrency space, seeking to establish its regulatory authority. A recent development in its lawsuit against crypto miner Green United provides insight into how the SEC might approach its case against crypto exchange Coinbase and sheds light on its broader regulatory stance. In this analysis, we delve into the recent developments, legal arguments, and implications for the crypto industry.

The Background: Terraform Labs and Green United Cases

On July 31, the SEC achieved a victory when District Judge Jed Rakoff denied Terraform Lab’s motion to dismiss their case. Terraform Lab’s argument was centered around the “major questions doctrine,” asserting that the SEC’s regulatory authority lacked clear authorization from Congress.

Interestingly, the same doctrine has been invoked by Green United, a purported crypto miner, in its own motion to dismiss. This doctrine has also been a focal point in cases against the SEC, including those involving major players like Coinbase.

However, in a filing dated August 4, the SEC countered Green United’s argument by referencing the recent Terraform Labs ruling. The SEC contended that the Terraform Labs ruling provides additional legal support for rejecting both the “major questions doctrine” and the “fair notice” defenses invoked by Green United.

The SEC’s Position and Implications for Coinbase

The SEC’s recent filing highlighted that the court in the Terraform Labs case rejected the defendants’ claims that the “Major Questions Doctrine” and the Due Process Clause should prevent the SEC from classifying the company’s digital assets as “investment contracts.” The SEC’s argument suggests that the Terraform Labs ruling strengthens its position against similar arguments made by Green United.

Importantly, the SEC’s recent stance could also offer insights into its potential approach to Coinbase’s motion to dismiss, which was also filed on August 4. Coinbase’s motion is centered around the “major questions doctrine,” particularly as it relates to the SEC’s attempt to regulate the secondary market for cryptocurrency trading.

In its motion, Coinbase contends that regulatory authority requires clear authorization from Congress and that the “major questions doctrine,” established in a 2022 Supreme Court ruling, limits the scope of authority that agencies like the SEC can exercise.

The Implications for Crypto Regulation

The SEC’s arguments and its references to recent rulings highlight its determination to assert its regulatory authority in the cryptocurrency space. The use of precedent to bolster its case has been a common strategy in its legal battles against entities in the crypto industry.

While the “major questions doctrine” was established to limit agency authority and ensure clear authorization from Congress, the interpretation of its application in the context of cryptocurrencies is now being debated in courts. The outcome of these cases could have broader implications for how regulatory agencies like the SEC can oversee and regulate the evolving crypto landscape.

Conclusion: Navigating Legal Challenges and Regulatory Landscape

As the legal battles between the SEC and various entities in the cryptocurrency industry continue, the outcome of each case carries significance beyond the individual defendants. The recent Terraform Labs ruling and the SEC’s subsequent use of it to counter Green United’s argument offer a glimpse into the regulatory authority’s strategy.

As the SEC’s approach to cases like Coinbase unfolds, the crypto industry will be watching closely. The outcome of these legal battles will undoubtedly shape the regulatory landscape for cryptocurrencies and potentially set important precedents for how agencies can exercise authority in a rapidly evolving digital financial world.