The U.S. Securities and Exchange Commission (SEC) suffered a major setback in its lawsuit against Ripple, the crypto firm associated with the XRP token, when a federal judge denied its request to appeal a key loss.

The UK’s Finance Ministry, HM Treasury, is planning to introduce a Digital Securities Sandbox (DSS) by the end of the first quarter of next year, as revealed by Helen Boyd, the Capital Markets Director at the Financial Conduct Authority, the country’s financial watchdog.

The SEC has recently doubled down on accusations against Nasdaq-listed cryptocurrency exchange Coinbase, asking a federal judge to reject the exchange’s bid to dismiss the lawsuit.

Top stories in the Crypto Roundup today:

• Judge Rejects SEC’s Appeal Bid in Ripple Case
• UK's Finance Ministry Eyes Crypto Sandbox Initiative
• Coinbase’s Move to Dismiss SEC Lawsuit Should Be Rejected, Regulator Argues

Judge Rejects SEC’s Appeal Bid in Ripple CaseJudge Rejects SEC’s Appeal Bid in Ripple Case

The U.S. Securities and Exchange Commission (SEC) suffered a major setback in its lawsuit against Ripple, the crypto firm associated with the XRP token, when a federal judge denied its motion for an interlocutory appeal.

Judge Analisa Torres said in a brief on Tuesday that the SEC did not show that there were important legal questions or that there were reasonable disagreements over the law. However, the SEC still has a chance to win the case on other grounds. The judge scheduled a trial for April 2024 and the SEC can still appeal the final verdict.

The same judge ruled in July that Ripple violated securities laws in selling XRP to institutional investors, but did not violate securities laws by making the token available to retail investors through programmatic sales on cryptocurrency exchanges.

UK's Finance Ministry Eyes Crypto Sandbox Initiative

The UK’s Finance Ministry, HM Treasury, is planning to introduce a Digital Securities Sandbox (DSS) by the end of the first quarter of next year, as revealed by Helen Boyd, the Head of Capital Markets at the Financial Conduct Authority (FCA), the country’s financial watchdog.

A sandbox describes a safe environment for testing new products before they enter the market. The FCA has a similar scheme called the Regulatory Sandbox, where firms with promising products can get feedback from a select group of customers.

Boyd was speaking yesterday at CCDAS, the Digital Asset Summit organized by CCData. She differentiated the FCA’s “traditional” sandbox and the upcoming DSS, which she said has a “new rule set that would allow it to do new things with digital securities.”

According to the FCA’s Capital Markets Director, this is a novel approach to regulation as in the past regulators “tended to wait for activity to come along and regulate it,” while now it’s looking at a “much more iterative process” and expects it to be a “learning curve.”

Per Boyd, the FCA is still waiting for “Treasury to firstly publish the results of its consultation and then move forward with the legislative part.” Once that’s done, the regulator will “be in a position to take forward those new powers and work out what the regulatory framework is that we will be writing the rules for.”

Boyd also said that she believes that tokenization is a key feature of blockchain technology that could transform the traditional finance world when conventional securities instruments are on-chain, as it could “revolutionize” trading, settlement, and clearing processes.

Coinbase’s Move to Dismiss SEC Lawsuit Should Be Rejected, Regulator Argues

Yesterday, the SEC doubled down on accusations against Nasdaq-listed cryptocurrency exchange Coinbase, asking a federal judge to reject the exchange’s bid to dismiss the lawsuit.

Coinbase has sought to end the case before trial, arguing that crypto trades on exchanges are not equivalent to investment contracts. The SEC dismissed that argument, saying the case “turns on whether Coinbase intermediated transactions in ‘investment contracts’” and whether its users were “entitled to the protections afforded by the federal securities laws that require intermediaries of securities transactions to register with the SEC.”

The outcome of the case depends on how the court applies the Howey test, which determines what constitutes a security that falls under the SEC’s authority. Coinbase has a more restrictive interpretation of the test, while the SEC claims that the test is adaptable and broad.

The crypto exchange, which argued that no actual investment contract is established in crypto trades, had earlier said the regulator “abused its discretion" by alleging that the firm had been offering crypto products deemed unregistered securities.

Under Chair Gary Gensler, the SEC has argued most tokens fall under its jurisdiction and the platforms that trade them should be registered securities exchanges. The SEC accused Coinbase of violating its rules by illegally running as an exchange, brokerage and clearing agency without registration.

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