DeFi

first things first: the SEC's claim that the wallet acts as an unregistered broker has been dismissed

this means that while the lawsuit against Coinbase can continue, the claims against the wallet product will not be a part of the ongoing litigation

note that the SEC's argument for claiming that Coinbase operated as an unregistered broker through its wallet product was that (1) Coinbase charged a 1% commission fee for its services 💸 and (2) it "routed customer orders" to third-party providers

however, it failed to allege that Coinbase engaged in common broker activities, such as holding customer funds or negotiating terms for the transactions

now, here are highlights of the analysis that led to the decision to dismiss the wallet-related claim ✨   

#1 ⬩there is no suggestion that the "wallet undertakes routing activities in a manner recognized by courts to have been traditionally carried out by brokers... such as directing how trades should be executed"

#3⬩even though the wallet helps users discover pricing on DEXs, "providing pricing comparisons does not rise to the level of routing or making investment recommendations"

#4⬩in the same vein, the fact that Coinbase has at times received a commission "does not on its own turn Coinbase into a broker" — under the Exchange Act, commission-based payment is not dispositive of whether a party acts as a broker-dealer

it's a sigh of relief for self-custodial product offerings, but Coinbase's fight to defend its trading platform (and its Prime services) continues on 🤺

#2⬩the wallet is SELF-CUSTODIAL 🔒   Coinbase does not have control over user assets or transactions and end users are the sole decision-makers when it comes to transactions