In an exclusive interview with the Financial Times on Monday, Brian Armstrong, the CEO of Coinbase, a prominent cryptocurrency exchange platform, disclosed that the U.S. Securities and Exchange Commission (SEC) suggested his company undergo a radical change, right when the agency was preparing to sue the firm over alleged unregistered broker operations.
Had Coinbase complied with the SEC’s demand, the platform would have been forced to delist more than 200 tokens, leaving only Bitcoin—the world’s most traded cryptocurrency—available for trading. This move would have established a worrying precedent, potentially pushing other American crypto firms into illegal operations unless they registered with the SEC, as reported by the Financial Times.
Armstrong defended Coinbase’s refusal, stating, “Delisting every asset other than Bitcoin, which, by the way, is not what the law says, would have essentially meant the end of the crypto industry in the U.S.” The CEO highlighted that they had no other choice but to reject the SEC’s proposal.
The contentious issue revolves around the classification and regulation of cryptocurrencies. SEC Chair Gary Gensler has expressed his belief that most cryptocurrencies should be classified as securities. However, he has acknowledged that Bitcoin stands as an exception and should be treated as a commodity.
This classification plays a pivotal role in determining which regulatory body—either the SEC or the Commodity Futures Trading Commission (CFTC)—has jurisdiction over these assets.
In June, the SEC filed a lawsuit against Coinbase, alleging the platform had not registered as a broker, national securities exchange, and clearing agency. Furthermore, the SEC claimed that certain crypto assets offered on Coinbase, including popular tokens like Solana, Cardano, and Polygon, were unregistered securities.
The lawsuit came shortly after Coinbase, listed on Nasdaq, disclosed receiving a Wells notice, signaling the impending legal investigation from the SEC.
With the stage set for a high-stakes legal battle, Coinbase has chosen to challenge the SEC’s stance in court. The outcome of this legal showdown could have far-reaching implications for the future of the cryptocurrency industry in the United States.
