A federal judge has paused the SEC's lawsuit against Coinbase, agreeing with the company that the legality of crypto assets is a complex and novel legal question. Judge Katherine Failla noted that various courts across the U.S. have conflicting rulings regarding how crypto fits under existing securities laws. She emphasized the need for clarity as the Howey Test, which determines if an asset is a security, has not been firmly established regarding crypto. Failla's decision to grant an interlocutory appeal allows the Second Circuit Court to weigh in on the matter, which could lead to the dismissal of many SEC claims against Coinbase. Legal experts hailed this as a potentially pivotal moment for the crypto industry, as it could reshape regulatory frameworks surrounding digital assets. The SEC's approach, under scrutiny, faces challenges as the Trump administration prepares to take office, with expectations of a shift in regulatory stance toward crypto.

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