# Coinbase vs SEC: Is encryption a collectible or an investment? A classic showdown in court.

In Wednesday's court, Coinbase's lawyer William Savitt threw out a metaphor - buying coins is like stamp collecting; you are only buying the item itself, with no associated rights.

Specifically, Savitt's logic is as follows: buying coins issued by the Beanie Babies toy company and buying the Beanie Babies toys themselves are two different things. When you buy stocks, you have voting rights and dividend rights; when you buy coins? You have no rights at all, they are just collectibles.

But the SEC is not buying it. They cited a Supreme Court ruling from 1946: as long as you invest money into a business with the expectation of making a profit from the efforts of others, it is considered an investment and is subject to securities law. According to this standard, behind every encryption token stands a company or network, and what users are actually investing in is the growth potential of these businesses, which inevitably falls under the category of securities.

**Why is this case important?**

This is not just a matter for Coinbase. In June, the SEC directly sued Coinbase for illegally operating a securities exchange and acting as a broker, and it also targeted its staking services. Previously, the SEC won in the Terraform Labs case, where the judge ruled that UST and LUNA are securities. The current ruling could impact the entire industry - if all tokens are considered securities, all trading profits must be registered, and staking projects will have to accept regulation.

Coinbase CEO Brian Armstrong has stated that even if he loses the lawsuit, he will continue to operate in the United States, and he plans to challenge the bans in ten states, ultimately expanding staking services to all 50 states.

In simple terms: this lawsuit will determine the rules of play for the future encryption ecosystem in the United States.