Coinbase is expected to argue that the US Securities and Exchange Commission (SEC) should dismiss its complaint against the platform in a court hearing on Wednesday. According to Coinbase, the SEC's regulatory overreach should be rejected since the tokens exchanged on its platform are not analogous to securities.

Arguments and Allegations: The lawsuit focuses on the token trading and staking program

The cryptocurrency community is keeping a close eye on this legal dispute because it may clarify the SEC's authority over the digital asset market. The main thrust of Coinbase's case centers on the claim that the SEC is abusing its power and that, in contrast to conventional stocks or bonds, the assets offered on its platform are not securities.

Alleging that Coinbase enabled the trade of at least 13 cryptocurrency tokens that ought to have been registered as securities, the SEC sued the exchange in June. Additionally, Coinbase was charged by the regulatory body with operating without the required registration as a national securities exchange, broker, and clearing agency.

One specific area of disagreement is Coinbase's "staking" scheme, in which users are rewarded and the platform pools funds to verify activity on blockchain networks. According to the SEC, this program ought to have been registered with the organization.

Coinbase Gets Suggestions for SEC Lawsuit from Ripple Labs Case

The cryptocurrency community is keeping a close eye on this legal dispute because it may clarify the SEC's authority over the digital asset market. The main thrust of Coinbase's case centers on the claim that the SEC is abusing its power and that, in contrast to conventional stocks or bonds, the assets offered on its platform are not securities.

Alleging that Coinbase enabled the trade of at least 13 cryptocurrency tokens that ought to have been registered as securities, the SEC sued the exchange in June. Additionally, Coinbase was charged by the regulatory body with operating without the required registration as a national securities exchange, broker, and clearing agency.

One specific area of disagreement is Coinbase's "staking" scheme, in which users are rewarded and the platform pools funds to verify activity on blockchain networks. According to the SEC, this program ought to have been registered with the organization.

Coinbase Gets Suggestions for SEC Lawsuit from Ripple Labs Case

In contesting the SEC's position, Coinbase is not acting alone. Similar opinions are held by other cryptocurrency companies, which collectively contend that legislation is required to govern the sector and that the majority of tokens do not fit the definition of a security.

Citing a different case involving Ripple Labs, in which a judge determined that the business did not break federal securities law by offering its XRP cryptocurrency token for sale on open exchanges, Coinbase attempted to have the SEC's complaint dismissed in August. According to Coinbase, this decision represents a major win for the cryptocurrency industry. The SEC, however, is adamant that its lawsuit against Coinbase should go forward and cites a different court decision that bolstered its stance in the case of cryptocurrency creator Terraform Labs.