It justified its stance by repeating its stance that federal securities laws are designed to be interpreted flexibly through the legal doctrine known as the “Howey Test”

The US SEC is arguing that crypto currencies lack any “innate or inherent value” as part of their case against Coinbase in federal court—prompting response from Coinbase and crypto watchers.

In reaction to a motion to reject the SEC’s lawsuit filed over the summer, the agency petitioned a judge to dismiss Coinbase’s position that crypto currency trading does not count as an investment contract between parties. It justified its stance by repeating its stance that federal securities laws are designed to be interpreted flexibly through the legal doctrine known as the “Howey Test.”

Under Howey, the Securities and Exchange Commission has argued for decades that investments ranging from whiskey caskets to chinchilla farms can be regulated as investment contracts. Nevertheless, it says that many crypto currencies differ only because they “have no innate or inherent value” on their own—whereas the tokens it referred to in its lawsuit meet the criteria under Howey.

If crypto assets embody some underlying value, that value is accessed through the digital token, the Securities and Exchange Commission wrote in its filing. But the token has no innate or inherent value of its own—it is tied to its underlying value, which for the crypto assets at issue in this case, is the investment contract.

But the Securities and Exchange Commission’s arguments were rejected by Coinbase’s CLO Paul Grewal, who dismissed their motion “more of the same old” position.

The SEC’s arguments today would mean that everything from Pokemon cards to stamps to Swiftie bracelets are also securities, he stated. As (New York congressman Rep. Ritchie Torres) made so clear previous week, that is simply not the law, nor should it be.

He was referring to Rep. Torres’ questioning of Gary Gensler at a House Financial Services Committee hearing last month.