Coinbase’s CEO informed the Financial Times that the Securities and Exchange Commission requested a suspension of cryptocurrency trading, except for bitcoin, prior to suing the company in June.
In a bold move to protect the future of the crypto industry in the United States, Coinbase, the nation’s leading crypto exchange, made the decisive choice to take the SEC’s request to court. According to CEO Brian Armstrong, complying with the request would have spelled the demise of the entire crypto industry in the country. Armstrong expressed this stance with utmost certainty during an interview published in the FT.
While the SEC denied explicitly asking companies to delist crypto assets, they acknowledged that their staff may share views on potential issues related to securities laws during investigations. Despite not disputing Armstrong’s statements, Coinbase’s spokesperson clarified that the FT article lacked essential context about their conversations with the SEC. They emphasized that the views expressed in the article were representative of some staff members at the time, but not reflective of the Commission’s broader position.
Coinbase firmly believes that transparent and fair rulemaking, along with necessary Congressional action, represents the optimal path forward for American crypto users and the companies contributing to the cryptoeconomy in the US. This stance comes amidst the SEC’s lawsuit against Coinbase and its international counterpart, Binance, alleging the operation of illegal exchanges. The SEC’s increased scrutiny marks a significant escalation in its efforts to regulate the crypto industry after years of operating in a regulatory gray area.
Recounting the discussions with the regulator before the lawsuit, Armstrong revealed that Coinbase had sought clarity on the SEC’s classification of digital assets as securities, excluding bitcoin. However, the SEC declined to provide an explanation and insisted on delisting all assets other than bitcoin.
The debate between crypto companies and the SEC centers around the classification of crypto products as traditional securities or commodities. The companies argue that they represent a new form of digital assets, warranting bespoke rules and regulations, while the SEC maintains that most crypto offerings should face the same government regulations as stocks and bonds on Wall Street.
With the lawsuits against Coinbase and Binance in motion, the potential for judicial reviews and litigation could serve as catalysts to prompt Congress to address the regulation issue. This development may contribute to more comprehensive regulations in the crypto space.
Investors have responded positively to Coinbase’s stance, as evidenced by the rise in the company’s stock, which went public in 2021, showing an impressive nearly 200% increase in value this year alone.