Jan 17 (Reuters) - A federal judge pressed the U.S. securities regulator at a court hearing on Wednesday on details of its lawsuit against Coinbase, asking what specific features of a crypto token constitute an investment contract.

Coinbase, the world's largest publicly traded cryptocurrency exchange, has asked Judge Katherine Polk Failla to dismiss the case because crypto assets, unlike stocks and bonds, are not subject to oversight by the U.S. Securities and Exchange Commission (SEC). The firm, along with other crypto companies, says the SEC has overstepped its authority.

The SEC sued Coinbase in June, saying the firm facilitated trading of at least 13 crypto tokens, including Solana, Cardano and Polygon, that should have been registered as securities. The SEC also said Coinbase was operating illegally as a national securities exchange, broker and clearing agency without registering with the regulator.

At a hearing in a Manhattan court on Coinbase's motion to dismiss the case, Failla questioned SEC attorneys about which attributes of the 13 tokens at issue made them securities in the regulator's view.

“I am concerned... that what you're asking for is to broaden the definition of what constitutes a security," the judge said.

Patrick Costello, SEC assistant chief litigation counsel, argued that the crypto tokens at the heart of the case backstop a larger "enterprise," or blockchain network, making them akin to an investment contract.

“When the value of the network or the ecosystem increases, so does the value of the token," he said.

The hearing is the next major development in a closely watched court battle between Coinbase and the Securities and Exchange Commission that is likely to have implications for digital assets since it could clarify the SEC's jurisdiction over the sector.

The SEC in its lawsuit also targeted Coinbase's "staking" program, in which it pools assets to verify activity on blockchain networks and takes commissions, in exchange for "rewards" to customers. It said that program should have been registered with the agency.

The case is one of a slew the SEC has brought against the crypto sector under the premise that many crypto assets are securities. The agency focused initially on companies selling digital tokens, but under the leadership of chair Gary Gensler has shifted focus to firms offering trading platforms and clearing activity, and acting as broker-dealers.

The SEC had a winning record in crypto when it sued firms over tokens they issued. But last year, lost a key argument in its high-profile case against Ripple.

Crypto companies deny that most tokens meet the definition of a security and say legislation is needed to regulate the industry. (Reporting by Hannah Lang in Washington and Chris Prentice and Jody Godoy in New York; Editing by Michelle Price, Christopher Cushing and David Gregorio)