Coinbase CEO Faces SEC Over Crypto Trading Restrictions
The SEC reportedly requested Coinbase CEO to suspend trading in all cryptocurrencies except Bitcoin before filing a lawsuit against the exchange, according to CEO Brian Armstrong. This request was made as part of the SEC’s effort to extend its regulatory influence across a broader crypto market segment.
Read more about the SEC suing Coinbase in our article.
The SEC filed a lawsuit against Coinbase for failing to register as a broker and categorized 13 cryptocurrencies on its platform as securities. The notable aspect is the SEC’s recommendation to Coinbase to remove over 200 tokens from its platform, leaving only Bitcoin. This suggests the SEC, under Gary Gensler’s leadership, is seeking broader authority over the crypto industry.
Brian Armstrong revealed the SEC’s stance, stating, “we believe every asset other than Bitcoin is a security.” Coinbase’s refusal to comply with this request led to the SEC’s lawsuit. If Coinbase had agreed, it could have set a precedent, potentially impacting many other U.S. crypto businesses.
Armstrong emphasized that delisting every asset except Bitcoin, as per the SEC’s suggestion, would have meant the end of the crypto industry in the U.S. He expressed that going to court was the only viable option to challenge the SEC’s interpretation.
Regulation in the crypto industry remains uncertain, with conflicting claims for authority between the SEC and the Commodity Futures Trading Commission (CFTC). Gary Gensler’s belief that most cryptocurrencies, excluding Bitcoin, are securities is reflected in the SEC’s recommendation to Coinbase.
Notably, Ether, the second-largest cryptocurrency, was not implicated in the SEC’s case against Coinbase, and it was also absent from the specified “crypto asset securities” in the SEC’s lawsuit against Binance.
The ongoing debate revolves around whether the SEC should have jurisdiction over all or specific crypto tokens, as the classification of cryptocurrencies remains a contentious issue.
Bringing the crypto industry under SEC oversight would impose more stringent compliance standards, which might pose challenges for exchanges engaged in diverse practices. The SEC’s potential influence could impact numerous American companies built on the assumption that crypto tokens are not securities.
The implications of a Coinbase settlement, involving the delisting of all tokens except Bitcoin, on the broader industry remain uncertain. The SEC has not commented on how such a settlement might affect other companies in the crypto space.
