Bill Morgan, lawyer, and crypto enthusiast, thinks the SEC wants to define all crypto under securities law. Morgan believes the recent activities by the SEC do not target just crypto exchanges but also wallet developers and providers.
That is very important. Wallet developers and providers are SEC targets. The SEC seeks to make every component of the crypto ecosystem fit into some securities law definition https://t.co/UH4TuDvcLG
— bill morgan (@Belisarius2020) August 12, 2023
Morgan posted on X about Amanda Tuminelli, the Chief Legal Officer (CLO) at DeFi Education Fund, who explained her group’s amicus curiae to the court on the SEC vs. Coinbase matter. According to Tuminelli, her team’s approach aims to help the court understand the nuances of the technology at issue.
Tuminelli noted that as much as Coinbase is a popular crypto exchange, it is also a software developer and an IT service provider. The DeFi Education Fund urged the court to keep in mind the impact of their decision on the ecosystem’s tech developers and service providers.
Tuminelli stated that the Fund argued that making wallet apps is not a broker’s job. The CLO’s team clarified that as a broker, an entity has to effect transactions in securities for others, acting as an intermediary. Hence, they explained that the workings of wallets show the passive software application is not an intermediary.
The team further explained that Coinbase does not control user assets, handle customer funds or commingle assets through Wallet. Coinbase does not open customer accounts through Wallet, as there is no such thing as opening an account on a blockchain.
Tuminelli and the team noted Coinbase does not route orders using Wallet. Instead, only the users control their assets and are the only decision-makers for transactions. Wallet application software allows users to communicate their desired transactions to a blockchain network.
The DeFi Education Fund also argued that Coinbase’s Staking Program is not a securities offering because Coinbase’s role concerning staking is ministerial, similar to an IT service provider.
