"I want to understand how your standard does not sweep in the collectible market or commodities," Judge Failla remarked, highlighting the potential overextension of the SEC's reach based on a 78-year-old definition of investment contracts.

The SEC's case against Coinbase marks a crucial moment in its strategy to control the cryptocurrency market, but the judge's skepticism suggests a critical examination of the agency's approach.

Coinbase's defense argues that cryptocurrencies are more akin to commodities, and the company cites the major questions doctrine to challenge the SEC's authority without explicit congressional directive.

The judge's decision, which could set a precedent for the industry, is highly anticipated.