Paul Grewal, CLO of Coinbase, believes collectibles, like PokΓ©mon cards, might be essential in rejecting the expanded definition of what the U.S. Securities and Exchange Commission (SEC) claims to be a security. To Grewal, these cards are also part of an ecosystem fueling their value, an element the SEC considers part of what makes some tokens securities.
Coinbase CLO Argues PokΓ©mon Collectibles Might Throw Down SECβs Case
Coinbase CLO Paul Grewal commented about how playing card games like PokΓ©mon, the Nintendo franchise, might dent the logic that the U.S. Securities and Exchange Commission (SEC) presented during the first hearing in its case against the exchange.
In June, Coinbase was charged by the SEC under allegations of operating as an unregistered broker and infringing upon various securities laws.
During this first encounter, one of the core discussions involved the definition of security, which differed for each party. While Coinbase argues that none of the tokens involved in the case (ICP, AXS, CHZ, FLOW, DASH, VGX, FIL, NEXO, NEAR, ADA, SAND, SOL, and MATIC) are securities due to the lack of a signed contract between seller and buyers in secondary markets, the SEC introduced a new element, citing the existence of an ecosystem behind these tokens as a part of its expanded understanding in the issue.
Nonetheless, Grewal argues that not only tokens can have an ecosystem behind them to back them. In a post on X, Grewal stated:
To say PokΓ©mon cards do not provide access to an ecosystem is to say you never played PokΓ©mon. This argument to avoid sweeping them in as securities but still tag tokens is, well, absurd.
During the first hearing, Judge Katherine Polk Failla also showed some contempt for this expanded definition promoted by the SEC, stating that broadening it would risk including even collectibles as securities.
Grewal quoted an article titled βInto the Not-So-Wild World of PokΓ©mon,β describing how PokΓ©mon and its trading card game outgrew their intended target, becoming an ecosystem. The article explained:
In each new game, PokΓ©mon iterates on the ecosystem it invented before, making it more user-friendly and including new features that appeal to players.
What do you think about PokΓ©mon trading cards? Do you think these might be classified as securities under the SECβs broad definitions? Tell us in the comments section below.
