The Supreme Court’s student loan decision could be Coinbase’s golden ticket.

Share this article

Coinbase's lawyers are using the Supreme Court's ruling on student loan debt to bolster its defense against a lawsuit by the Securities and Exchange Commission (SEC). The cryptocurrency exchange has been accused of running an unregistered securities exchange, a charge it vehemently denies.

Coinbase's argument draws comparisons to the Supreme Court's recent ruling on student loan cancellations. The ruling ruled that the Secretary of Education exceeded his authority to wipe out $430 billion in student debt, underscoring a key legal principle: Major decisions with significant economic and political impact require clear approval from Congress.

Coinbase in Biden v. Using this legal doctrine, which is standard in Nebraska, the crypto industry's congressional laws are unclear. In its legal filing, Coinbase said:

“Rather than providing the SEC with the ‘express congressional authorization' required to exercise such authority, it recognizes that Congress has not yet delegated this regulatory authority and is actively considering regulatory structures for the digital asset industry.”

Creatively, Bittrex filed a similar complaint in June, arguing that the SEC does not have the constitutional right to overrule Congress in making such decisions because neither the Exchange Act nor the Securities Act of 1933 gives the SEC the right to declare a token a security.

“‘[s]Sometimes old laws can be rewritten in ways that apply to new and previously unforeseen situations. […] But an agency's attempt to deploy an old, problem-focused law to address a new and different problem may be a warning sign that it is acting in the absence of clear congressional authority.”

As this legal battle rages, lawmakers are considering various digital property regulations. Among the proposals is a bipartisan bill by Senators Cynthia Lammis and Kirsten Gillibrand, which suggests providing “a strong, tailored regulatory framework for stablecoins, and integrating digital assets with digital asset regulation under existing tax and banking laws.”

Another bill seeks to dethrone SEC Chairman Gary Gensler, with Reps. Warren Davidson and Tom Emmer (MN-06) saying “U.S. capital markets must be protected from a dictatorial chairman, including the current one.”

Despite this, the SEC has maintained its position that Solana (SOL), Cardano (ADA) and Polygon (MATIC) and six other tokens are regulated securities. The SEC contends that Coinbase, along with other platforms such as Binance and Bittrex, knowingly violated the law by failing to register their activities. All companies have denied these allegations.

Share this article