OPINION AND ORDER The United States Securities and Exchange Commission (the “SEC” or the “Commission”) brings this enforcement action against Coinbase, Inc. (“Coinbase”) and Coinbase Global, Inc. (“CGI”) (collectively, “Defendants”), alleging that Coinbase intermediated transactions in crypto-asset securities on its trading platform and through related services, all in violation of the federal securities laws. At first blush, the addition of the prefix “crypto” to a commonly understood word like “asset” may suggest a paradigm shift. And, indeed, it is the putative differences between crypto-assets and their more traditional counterparts that animate Defendants’ arguments. It is undisputed, for instance, that Coinbase provides a platform and other services that allow customers to transact in hundreds (and in one instance, thousands) of different crypto-assets. It is also undisputed that Coinbase offers these services without registering with the SEC as a securities exchange, broker, or clearing agency. Coinbase reasons that the transactions executed and facilitated through its platform and related services do not qualify as “securities,” and thus fall outside the scope of the SEC’s delegated authority. The SEC disagrees, and counters that at least some of the transactions on Coinbase’s platform and through related services constitute “investment contracts,” which the federal securities laws have long recognized as securities. The parties readily acknowledge that the viability of this enforcement action hinges on this difference of opinion. Defendants have moved for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). Having now carefully considered the parties’ arguments, as well as the many amicus curiae submissions in this case,1 the Court concludes that because the well-pleaded allegations of the Complaint plausibly support the SEC’s claim that Coinbase operated as an unregistered intermediary of securities, Defendants’ motion must be denied in large part. As explained herein, the “crypto” nomenclature may be of recent vintage, but the challenged transactions fall comfortably within the framework that courts have used to identify securities for nearly eighty years. Further, the Court finds that the SEC adequately alleges that Coinbase, through its Staking Program, engaged in the unregistered offer and sale of securities. However, the Court agrees with Defendants that they are entitled to dismissal of the claim that Coinbase acts as an unregistered broker by making its Wallet application available to customers. BACKGROUND2 A. Factual Background 1. The Parties a. The Securities and Exchange Commission and the Regulation of the Securities Markets The contemporary framework for the regulation of the U.S. securities markets began with the enactment of the Securities Act of 1933 (the “Securities Act”), Pub. L. 73-22, 48 Stat. 74, and the Securities Exchange Act of 1934 (the “Exchange Act”), Pub. L. 73-291, 48 Stat. 881. With the Great Depression ongoing, and the stock market crash of 1929 still top of mind, Congress sought to protect investors in the U.S. capital markets by regulating the offer and sale of securities, theretofore regulated exclusively by the states. With the Securities Act, Congress sought to “protect investors by requiring publication of material information thought necessary to allow them to make informed investment decisions concerning public offerings of securities in interstate commerce.” Pinter v. Dahl, 486 U.S. 622, 638 (1988) (collecting cases). In the Exchange Act, enacted one year later, Congress focused on the oversight of securities through registration and regulation of certain participants in the securities market, as a means to “insure the maintenance of fair and honest markets in [securities] transactions.” 15 U.S.C. §78b. Of central importance to the instant case, Section 2(1) of the Securities Act defines the term “security” to include: any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security”, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. 15 U.S.C. §77b(a)(1). This definition “include[s] the commonly known documents traded for speculation or investment,” such as stock and bonds. SEC. v. W.J. Howey Co., 328 U.S. 293, 297 (1946). “This definition also includes ‘securities’ of a more variable character, designated by such descriptive terms as ‘certificate of interest or participation in any profit-sharing agreement,’ ‘investment contract’ and ‘in general, any interest or instrument commonly known as a ‘security.’” Id. As discussed in greater detail below, the Supreme Court has further interpreted the meaning of the term “investment contract” to implicate transactions “involv[ing] an investment of money in a common enterprise with profits to come solely from the efforts of others.” Id. at 301. Whereas the Securities Act was concerned with the designation and regulation of securities, the Exchange Act focused on the regulation of transactions in such securities in the secondary market. To that end, the Exchange Act established the SEC and “delegate[d] to [it] broad authority to regulate…securities.” SEC v. Alpine Sec. Corp., 308 F. Supp. 3d 775, 790 (S.D.N.Y. 2018). The statute also set forth a comprehensive regulatory regime designed to, among other things, protect investors from manipulation and fraud, ensure that securities orders were handled fairly and transparently, and make certain that securities transactions resulted in settlement finality. (Compl.
39, 43).3 As part of this regulatory regime, Congress imposed registration requirements on certain defined participants in the national securities markets, including but not limited to exchanges, brokers, and clearing agencies. (Id. 22). Regulated entities were subject to certain disclosure, recordkeeping, inspection, and anti-conflict-of-interest provisions. (Id. 2). b. Coinbase and CGI Defendant Coinbase is currently the largest crypto-asset trading platform in the United States, servicing over 108 million customers, accounting for billions of dollars in daily trading volume in hundreds of crypto-assets. (Compl. 1). In April 2014, Coinbase became a wholly-owned subsidiary of CGI, as part of the latter’s efforts to become a public company. (Id. 15). Further to that end, on February 25, 2021, CGI publicly filed with the SEC a Form S-1 registering an initial offering of its Class A Common Stock. (Id. 111). Since April 2021, Coinbase has been a publicly traded company. (Id.). 2. Crypto-Assets Generally4 The focus of the SEC’s charges — and the core of Coinbase’s business — involves the mode of exchange known as cryptocurrency. Also referred to as “crypto-assets,” “tokens,” or “coins,” these digital assets are computer code entries on “blockchain” technology that record their owners’ rights to access applications or services on a network. (Compl.
