Coinbase vs. SEC case will determine crypto tokens fate

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Coinbase and the U.S. Securities and Exchange Commission faced off in court on Jan. 17 to present arguments on whether Judge Katherine Polk Failla should dismiss or allow the case to continue.

The case — initiated by the SEC in June 2023 against Coinbase — is so far one of the biggest court battles within the crypto space, as the classification of 13 tokens is at stake.

During the hearing, Judge Failla showed a deep understanding of the crypto industry, repeatedly pressing SEC attorneys to justify why — and when —- the tokens should be considered securities.

Coinbase’s counsel disputes claims of networks and crypto communities being labeled as “common enterprise,” as well as comparisons of crypto tokens to stocks, arguing that token purchases on the secondary market lack the rights that go along with stocks in similar transactions.

Judge Failla has yet to decide if the case should proceed or if Coinbase’s motion for dismissal should be granted. It is noteworthy that she has a background in dismissing crypto cases. In 2013, she granted a motion to dismiss a case against Uniswap for allegedly selling “scam tokens.”

Judge Failla knows her decision will reverberate across the industry. During the hearing, she expressed concerns over constraining the SEC’s authority to oversee the crypto space, as well as reservations over classifying a new technology that still lacks regulatory clarity from Congress.

Her concerns indicate that, no matter the decision, the case is in the hands of someone who is knowledgeable about the impacts it may have on businesses, regulation and millions of individuals in and outside the United States.

This week’s Crypto Biz also explores VanEck’s overhaul of Bitcoin ETFs, IRS changes on crypto rules, Bitcoin ETFs performance, and Core Scientific shares relisting.

VanEck to delist Bitcoin Strategy ETF, citing performance and investor interest

Asset management firm VanEck announced that it plans to close and liquidate its Bitcoin strategy exchange-traded fund less than two years after it launched. In a Jan. 17 announcement, VanEck said its board of trustees approved the liquidation and dissolution of the Bitcoin Strategy ETF on the Cboe BZX Exchange, where it had been listed since November 2021. The decision came roughly seven days after the asset management firm received approval from the U.S. SEC to list shares of its spot BTC ETF.

IRS steps back crypto tax rules, exempting TXs over $10K from obligations

U.S. businesses won’t yet need to report cryptocurrency transactions above $10,000 to the Internal Revenue Service (IRS) until the tax agency releases a regulatory framework. The decision follows a revision of the Infrastructure Investment and Jobs Act (IIJ Act) by the U.S. Treasury Department and the IRS, according to a Jan. 16 announcement from the IRS. On Jan. 1, a law requiring all U.S. businesses to report cryptocurrency transactions over $10,000 came into effect, but the tax regulator has stepped back from enforcing the rule for the time being.

Bitcoin ETFs top 3x daily volume of all 500 ETFs launched in 2023 combined

The total volume across 10 spot Bitcoin exchange-traded funds (ETFs) on Jan. 16 outpaced the total volume for all 500 ETFs launched in 2023 more than three times over. Yahoo Finance data compiled by Cointelegraph revealed the 10 recently approved spot Bitcoin ETFs generated just over $1.8 billion in total volume on Jan. 16, with funds offered by Grayscale, BlackRock and Fidelity accounting for $1.6 billion of the total. In comparison, the combined trading volume for all 500 ETFs launched in the U.S. in 2023 was just $450 million, according to Bloomberg ETF analyst Eric Balchunas.

Bitcoin miner Core Scientific to exit bankruptcy, relist shares in ‘coming days’

Crypto mining firm Core Scientific has been given court approval to emerge from bankruptcy and relist its CORZ shares on the Nasdaq — putting an end to a 13-month restructuring process. In a Jan. 16 statement, Core Scientific said its plan of reorganization had been confirmed by the bankruptcy court for the Southern District of Texas. The firm is targeting an emergence date of Jan. 23 and anticipates being relisted on the Nasdaq the following day. Under the terms of the Chapter 11 plan, existing shareholders will retain around 60% of the company’s shares. The restructuring plan would also trim millions in debt from its balance sheet and provide “full recovery” to all classes of creditors.

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