SEC requested Coinbase to exclusively trade bitcoin prior to suing the crypto exchange.
SEC requested Coinbase to exclusively trade bitcoin prior to suing the crypto exchange.
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Coinbase Challenges the SEC’s Restriction on Cryptocurrencies
Date: July 31, 2022
The ongoing battle between Coinbase and the U.S. Securities and Exchange Commission (SEC) took an interesting turn recently, as the CEO of Coinbase, Brian Armstrong, revealed that the SEC had asked the company to stop trading in all cryptocurrencies except bitcoin prior to suing them in June[^1^]. This revelation sheds light on the severity of the situation and the potential implications it could have had on the broader cryptocurrency industry.
Armstrong stated that the SEC’s request essentially amounted to the end of the crypto industry in the United States[^1^]. Delisting every asset other than bitcoin, despite it not being mandated by law, would have crippled the industry, which relies on a diverse range of cryptocurrencies to thrive. This put Coinbase in a difficult position, leading them to take the matter to court and seek the court’s guidance on the issue[^1^].
The SEC filed a lawsuit against Coinbase, accusing the platform of operating illegally by failing to register as an exchange[^1^]. Additionally, the SEC claimed that Coinbase traded at least 13 crypto assets which should have been registered as securities, including popular tokens like Solana, Cardano, and Polygon[^1^]. It is worth noting that the SEC clarified that its enforcement division did not make formal requests for companies to delist crypto assets[^1^].
Coinbase disputed the SEC’s claims and emphasized that the agency had never shared a position indicating that all assets other than bitcoin were securities[^1^]. A spokesperson for Coinbase stated that staff members do not make formal requests without a vote of the full commission, contrary to what was implied by the article[^1^]. Coinbase continues to engage in discussions with the SEC and believes that clear regulatory frameworks and actions from Congress would be the most effective way to support American crypto users and companies in the burgeoning cryptoeconomy[^1^].
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The SEC’s legal actions against Coinbase are part of SEC Chair Gary Gensler’s effort to establish jurisdiction over the crypto industry[^1^]. Gensler has referred to the industry as the “Wild West” and argued that it has compromised investor trust in the U.S. capital markets[^1^]. On the other hand, crypto companies contend that the SEC’s regulations are ambiguous and that the agency is exceeding its authority by attempting to regulate them[^1^].
The report also highlights that the SEC did not respond immediately to requests for comment from ANBLE, suggesting that the regulatory authority is navigating through this situation cautiously[^1^].
This clash between Coinbase and the SEC underscores the challenges faced by the cryptocurrency industry in terms of regulation and compliance. While it is crucial to maintain investor protection and ensure a fair market, it is equally important to create a regulatory environment that fosters innovation and growth. The outcome of this case will likely have far-reaching implications for the crypto industry, not just in the United States but globally as well.
References:
[^1^] Source: Financial Times – “Coinbase CEO says US SEC denied the right to trade securities”
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