The SEC has backed themselves into a corner trying to stretch out the meaning of what a security is. The judge with the Coinbase case is closely monitoring the Binance case which right now, is looking very bad for the SEC. The judge with the Binance case wants a clear definition of what a security is, and now the SEC has no choice but to give a definition. And no matter what they say at this point is going to make them look bad, because if they say it's a security they will trip up on their own words from the past, and if they say it's not a security they will look like fools taking this to court. The SEC is going to look very bad in court again and lose even more credibility than they already have.
The Howey Test The leading Supreme Court case provides a full analysis of the definition and is the starting point of any analysis of whether an instrument is a security. The case is SEC v. Howey Co., 328 U.S. 293 (1946). Boiling that analysis down to a sentence, a security is “an investment of money in a common enterprise with profits to come solely from the efforts of others; and, if that test be satisfied, it is immaterial whether the enterprise is speculative or nonspeculative, or whether there is a sale of property with or without intrinsic value”. SEC v. Howey Co., 328 U.S. 293 (1946) The securities acts provide definitions of the term: The Securities Act Definition of a Security Section 2(a)(1) of the Securities Act of 1933 defines a security as: “any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security”, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.” The Exchange Act Definition of a Security Section 3(a)(10) of the Securities Exchange Act of 1934 has the following definition: “any note, stock, treasury stock, security future, security-based swap, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or in general, any instrument commonly known as a “security”; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing; but shall not include currency or any note, draft, bill of exchange, or banker’s acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited.”
Keep in mind that was written in 1934. And in no way does that describe a cryptocurrency. It was beyond what anyone could even fatham back then. Gary Gensler even said that crypto and alt coins were not securities before even stepping foot in the SEC position. Video link https://youtube.com/shorts/WazBfwwytSY?si=VbEMd2qpTejJ1ONa It's going to be extremely fun to watch him in court squirm like a worm