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Coinbase’s lawyers are referencing a Supreme Court decision on student loans to bolster its defense against Securities and Exchange Commission (SEC) charges. The cryptocurrency exchange has been accused of operating an unregistered securities exchange, an allegation it has vehemently denied.
Coinbase’s argument lies in comparison to the recent Supreme Court decision to cancel student loans. This ruling determined that the Secretary of Education exceeded his authority to write off $430 billion in student debt, underscoring a key legal principle: major decisions with significant economic or political impact require clear support from Congress.
Coinbase uses this legal doctrine, formalized in Biden v. Nebraska, to argue that congressional rules for the crypto industry remain unclear. In its legal filing, Coinbase said:
“Far from providing the ‘clear congressional authorization’ required for the SEC to exercise such authority, Congress has expressly acknowledged that it has not yet delegated such regulatory authority and is actively considering the structures of regulation for the digital asset industry.”
While new, Bittrex filed a similar complaint in June, saying that the SEC does not have the constitutional right to override Congress when making such decisions because the Exchange Act or The Securities Act of 1933 did not give the SEC the right to arbitrarily declare tokens as securities:
“‘[s]sometimes old laws can be written in ways that apply to new and previously unanticipated situations […] But an agency’s attempt to apply an old problem-focused law to solve a new and different problem can also be a warning sign that it is acting without clear authority to congress,”
As this legal battle continues, lawmakers are considering various digital asset regulations. Among the proposals is a bipartisan bill by Senators Cynthia Lummis and Kirsten Gillibrand, which proposes to provide “a strong, tailored regulatory framework for stablecoins, and integrates digital assets into our existing tax and laws.” in banking” in relation to digital asset regulation.
Another bill seeks to dethrone SEC Chair Gary Gensler, with Representatives Warren Davidson and Tom Emmer (MN-06) saying, “US capital markets must be protected from a tyrannical Chairman , including today.”
Despite this, the SEC remains firm in its position that Solana (SOL), Cardano (ADA), and Polygon (MATIC) and six other tokens are regulated securities. Coinbase, along with other platforms such as Binance and Bittrex, are known to have violated the law by not registering their activities, the SEC argued. All the companies have denied these allegations.