Ripple has got support from Coinbase in a case against SEC

The cryptocurrency exchange joins a trade group and others arguing that the SEC case threatens the wider industry.

Key points:

• Coinbase joins industry lobbying group and others arguing that the SEC case threatens the wider industry. 
• Ripple gets support from Coinbase against the SEC, which sued Ripple at the end of 2020 on allegations it sold XRP as an unregistered security.

Cryptocurrency exchange Coinbase has applied to a federal court for permission to testify in an ongoing lawsuit between the United States and SEC and Ripple Labs.

Coinbase joins industry lobbying group Blockchain Association, XRP-using crypto payments app SpendTheBits, and attorney John Deaton looking to support Ripple's lawsuit against the U.S. Securities and Exchange Commission, which alleges Ripple sues XRP for alleged sales in late 2020 as unregistered securities.

“Given the lack of SEC rules governing the cryptocurrency industry, questioning whether the SEC gave fair notice prior to taking enforcement action on the sale of one of the thousands of unique digital assets is often full of facts, making it particularly inappropriate for determining summary judgment," the Coinbase filing reads.

Coinbase similarly argued that the SEC’s enforcement approach has been inconsistent, creating “uncertainty” for companies in the industry.

“Furthermore, the SEC’s existing registration requirements for national stock exchanges are not currently suitable for the operation of digital asset platforms,” the filing reads. “However, existing SEC requirements allow only broker-dealers to be members of a registered stock exchange, which means that retail clients can only trade assets indirectly on the exchange using the broker-dealer’s services, and they charge transaction fees and any increase in The brokerage risk of the trading platform avoids the use of digital assets, which again benefits the client.”

"Ripple and other companies have been the subject of extensive law enforcement scrutiny, while other products or services with nearly identical products or services appear not to be," the filing reads.

Much of the filing focuses on this argument, arguing that regulators have failed to create rules that "will provide the regulatory clarity that companies want."

The document also addresses the argument that cryptocurrencies can be considered traditional securities, saying that most cryptocurrencies do not represent ownership interests or pay dividends like stocks.