Federal Judge Slams SEC for Refusing to Answer Direct Questions About Bitcoin, Ethereum

A panel of federal appeals court judges in Philadelphia expressed skepticism Monday about the U.S. Securities and Exchange Commission’s longstanding refusal to issue specific rules regarding cryptocurrency token sales.

During an afternoon hearing in the 3rd U.S. Circuit Court of Appeals, attorneys for Coinbase and the SEC said the regulator Should be made mandatory To effectively clarify the rules for cryptocurrencies over the years, “Forcibly regulate” Sporadic lawsuits filed against cryptocurrency companies and projects.

The three-judge panel, consisting of two Democratic-appointed judges and one Republican, questioned both sides for more than an hour about where the SEC draws the line when it comes to regulating cryptocurrencies and whether it should disclose more information about those decisions.

Several justices seemed taken aback during the conversation when SEC attorney Ezekiel Hill refused to clarify on the record whether his agency considers Bitcoin and Ethereum to be commodities. Hill argued that such a determination must still be made on a case-by-case basis.

“You’re not even going to say how the Howey test applies to bitcoin or ether,” Judge Stefanos Vivas chastised Hill, referring to the longstanding framework the SEC uses to determine whether an asset is a security. “They’ve been around for a long time, but you’re not going to take a position before us on whether or not (Coinbase) is a security, whether or not they trade bitcoin and ether.”

Bibas was appointed to the Third Circuit in 2017 by former President Donald Trump, who currently takes a more outspoken stance. Cryptocurrency Advocate. But Judge Thomas Ambrose, who was appointed to the court by former Democratic President Bill Clinton, also appears to be disputing the argument that the SEC doesn’t need to clarify its rules regarding cryptocurrencies.

“I don’t understand why,” Ambrose said of the SEC’s refusal to make such rulemaking public. “To an outside observer, it almost looks like they’re going after the (cryptocurrency) platforms and crushing the industry without actually getting into the rulemaking.”

The SEC has never explicitly stated what crypto tokens fall under its jurisdiction, but it did approve spot bitcoin and ethereum ETFs earlier this year, a groundbreaking move. integrated Both assets are part of the U.S. economy, and in doing so are effectively classified as non-securities.

Coinbase attorney Eugene Scalia (son of the late Supreme Court Justice Antonin Scalia), who jumped into the matter, devoted his closing remarks to the SEC’s refusal to clarify the security status of tokens that it previously considered non-issues.

“I leave this court with a better understanding of the SEC’s position on this issue than when I came in,” Scalia said. “Because I think one thing is clear, and that is that the SEC has determined that bitcoin and ether are not securities. That is an industry issue… and a court issue.”

“But this court can do something about it,” he added.

Edited by Andrew Hayward