John Deaton, a prominent advocate for XRP, firmly believes that the Coinbase case holds significant potential for the entire cryptocurrency community. This legal battle revolves around individuals purchasing digital coins on an exchange without having clear knowledge of the sellers involved. Deaton contends that the conventional Howey test, typically used to determine if an asset qualifies as a security, might not be the most appropriate tool for assessing this particular situation.
During his appearance on The Clinton Donnelly Show, Deaton outlined two potential outcomes for the Coinbase case
Firstly, he posited that the judge could permit the case to proceed concerning staking activities while restricting the SEC’s authority over the subsequent sale of digital assets. Such a ruling would undoubtedly have far-reaching implications for the regulation of cryptocurrencies.
Secondly, the judge might choose to dismiss the entire case on the grounds that the SEC should not be involved in overseeing the sale of digital assets post-initial offering. Should this scenario materialize, it could usher in a transformative shift in how regulators treat cryptocurrencies, a development of paramount significance for the crypto market.
Deaton is well aware of the uncertainty surrounding the timeline for Judge Torres’ decision in the Coinbase case. He underscores the likelihood that Judge Torres will take her time in considering the intricacies of this complex case.
Discussing the recent interlocutory appeal, Deaton remarked, “The best estimate I can provide is that we can expect a decision by the end of the year. I don’t foresee it stretching into January. While it could potentially be issued in the coming weeks, it’s important to acknowledge that the judge is likely to deliberate for at least 60 more days, which means we should anticipate waiting for another month, at least. To err on the side of caution, I’m comfortable stating that we can anticipate a decision by the end of the year.”
Despite the challenges posed by various political factors, Deaton underscores the pivotal role of judicial examination in shaping cryptocurrency regulation. He emphasizes that multiple courts have criticized the SEC’s enforcement practices, highlighting that the legal system is effectively holding the SEC accountable for its actions.