In an unconventional approach, John Deaton, a renowned cryptocurrency attorney and advocate for XRP, has encouraged XRP holders to reconsider their stance towards Coinbase. Despite some holders perceiving the popular cryptocurrency exchange as unfriendly, Deaton believes that the common adversary of both parties – the U.S. Securities and Exchange Commission (SEC) – could serve as the catalyst to bring them together.
A Necessary Alliance
Deaton’s comments come in the context of an ongoing legal battle between the SEC and Ripple Labs, the company behind XRP, over whether the digital asset is a security or not. With the SEC facing pressure from both XRP supporters and Coinbase, an alliance between the two could prove to be strategically beneficial.
Coinbase has also had its share of legal encounters with the SEC. Recently, a U.S. court ordered the SEC to respond to Coinbase’s complaint regarding the application of securities laws to digital assets. The Third Circuit Court of Appeals granted the SEC ten days to file its response, with Coinbase having another seven days to file a counter-response.
Coinbase’s Fight for Clarity
In its argument, Coinbase emphasized the lack of regulatory clarity for U.S. companies operating in the crypto sector. The exchange urged the SEC to provide clearer guidelines on how existing securities laws should be adapted to digital assets. Coinbase’s legal move is seen as a pre-emptive strike against the SEC, which had previously announced its intention to sue the exchange over allegations of offering unregistered securities products.
Deaton’s Take on the SEC’s Overreach
In an opinion piece published on Bloomberg Law, Deaton argued that the SEC’s claim that XRP is security goes beyond what the law and related court rulings on securities intended. He pointed out that the landmark SEC v. Howey decision in 1946 established a specific definition for securities, which could not have anticipated the complexities of digital commerce in the modern era.
Deaton contends that while a regulatory framework is beneficial for the crypto industry, SEC Chairman Gary Gensler’s view that cryptocurrencies should be regulated as securities poses significant legal and economic consequences.
