Judge sends Howey question to higher court in Coinbase case 

The Second Circuit will now consider how and if crypto assets should be subject to securities laws

article-image

Coinbase and Adobe stock modified by Blockworks

share


This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.


While some continue to hope that the upcoming Trump-era SEC will wave its magic wand and dismiss pending lawsuits against multiple crypto firms, Coinbase was just handed a win. 

The exchange, which the SEC sued in 2023, yesterday won its motion for an interlocutory appeal on whether crypto assets constitute investment contracts. The ruling is not an end to the case. But it will require the Second Circuit to consider this question, which, Coinbase argued, “could not be more pressing” in “numerous cases pending…across the country.” 

From Judge Katherine Polk Failla’s order to grant Coinbase’s interlocutory appeal motion: 

“At issue is more than how to apply Howey (about which, the Court agrees, there is an extensive body of case law); at issue is how to apply Howey to crypto asset transactions, in the context of the surrounding digital ecosystems. That is a difficult legal question of first impression for the Second Circuit — more than mere disagreement with the Court’s Order.” 

In other words, Failla thinks the legal question at hand — how and if crypto assets should be subject to securities laws — is too big to not consider at the appellate level. 

Failla has ordered a stay in proceedings until the interlocutory appeal is resolved, which could take months, if not longer. A ruling from the Second Circuit bears more weight than the District-level orders we’ve seen in recent months, many of which contradict one another. 

Coinbase’s expensive, time-consuming legal battle just may be exactly what the industry is looking for…assuming things go its way, of course.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research

article-image

The platform also rolled out 13 tokenized funds for institutions on the Connect platform

article-image

The company’s expanded lineup introduces new ETF products, as more and more issuers get into crypto funds

article-image

President Donald Trump announced a 10% levy on almost all goods and additional tariffs on so-called “worst offending” countries

article-image

Solana may be in “recomposition” mode, as new protocols put usefulness ahead of mere virality

article-image

The stablecoin issuer will have to contend with bigger players and the interest rates environment

article-image

The president reportedly was still working on his tariff policy plans late Tuesday evening