The digital asset industry is currently experiencing renewed interest after a challenging year in 2022. This period was characterized by the downfall of various cryptocurrency ventures, notably the highly publicized collapse of FTX, under the leadership of Sam Bankman-Fried. Coinbase has recently faced legal action from the Securities and Exchange Commission (SEC) due to its alleged non-compliance with exchange registration requirements. According to the recent filing by Cboe for the Fidelity bitcoin ETF, it has been disclosed that their platform was responsible for approximately 50% of the total U.S. dollar-bitcoin trading volume during the month of May. In a recent submission to a Manhattan federal court, Coinbase has expressed its intention to seek the dismissal of the SEC lawsuit. The company contends that the regulatory body does not possess the necessary jurisdiction to pursue civil claims, as the digital assets traded on its platform do not meet the criteria of “investment contracts” or securities.
The Securities and Exchange Commission (SEC) has previously declined multiple applications for spot bitcoin exchange-traded funds (ETFs), including a submission from Fidelity in January 2022. The regulatory body has consistently asserted that the submitted filings failed to adhere to the established standards aimed at preventing fraudulent and manipulative practices, while also safeguarding the interests of investors and the general public.