Second Circuit To Hear Critical Interlocutory Appeal In Crypto Securities Enforcement Action

In a significant development for the digital asset industry, U.S. District Judge Katherine Polk Failla of the Southern District of New York certified for an interlocutory appeal her prior Order finding crypto assets fall within the purview of the SEC. This is an extremely rare procedure that allows the U.S. Court of Appeals for the Second Circuit to address a critical question: Whether, under the factors set forth by the United State Supreme Court in its seminal Howey decision, crypto transactions can be deemed to be "investment contracts" and therefore can be regulated under the federal securities law. This appeal would be the first time a federal appellate court weighed in on these issues and could have sweeping implications for the regulatory treatment of digital assets, the nature of the Howey test itself and the future of crypto markets in the U.S.