What’s Uniting the SEC’s Crypto Cases

Earlier this week, a federal judge asked attorneys with the U.S. Securities and Exchange Commission why – “big picture” – there wasn’t any sort of uniting regulation addressing crypto.

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The narrative

We may not get a consensus on how the federal judiciary looks at crypto, and judges are increasingly raising the question of where such a consensus could come from.

Why it matters

Whether the U.S. Securities and Exchange Commission’s view of how securities law applies to crypto is valid in the eyes of the federal judiciary is an open question. We’ve seen rulings from various district courts that suggest it’s not a straightforward answer; now, judges themselves are saying more and more that something other than just public statements may be needed.

Breaking it down

Over the past week, we’ve heard from two different judges question lawyers with the SEC and crypto exchanges (Coinbase and Binance) about whether the federal agency has any sort of case against either crypto trading platform. Last week’s newsletter focused on the hearings held that week (of course) but this week’s rescheduled hearing in the SEC’s case against Binance also had some interesting comments from District Judge Amy Berman Jackson.

“Where’s the SEC been? Does that matter … why is it that if they’re trying to achieve legislation, is that some suggestion there’s something missing in the statute to cover this? Why are we doing this on a coin-by-coin, case-by-case, judge-by-judge litigation which depends on the … vagaries of the individual districts … as opposed to issuing a reg that tells everybody ‘this is it?'” she asked.

And to be clear, the judge said at the beginning of this line of questioning that it was a “big picture” line of inquiry, but it was still a point she repeated during the course of the hearing.

“Much of [Binance’s] brief has been focused on what I would call loose-leaf policy arguments: Congress is working on this, the SEC has taken contrary positions in the past. And you could certainly have a legitimate discussion about fairness, using litigation to regulate the cryptocurrency industry after years of inaction, or whether it makes sense as a…