The largest cryptocurrency exchange in the United States, Coinbase, was instructed by the US Exchange Commission (SEC) to stop trading all cryptocurrencies except Bitcoin (BTC). SEC claimed non-Bitcoin assets were securities, but Coinbase CEO disagreed.
Armstrong stated “They came back to us, and they said… we believe every asset other than Bitcoin is a security. And we said, well how are you coming to that conclusion, because that’s not our interpretation of the law. And they said, we’re not going to explain it to you, you need to delist every asset other than Bitcoin.”
Coinbase’s response to the SEC’s request could set a risky precedent, potentially leading to regulatory actions against other US crypto firms. Armstrong asserted that the SEC’s request to delist all assets except Bitcoin would ruin the US crypto market.
The SEC sued Coinbase in June, claiming that by failing to register as an exchange, the exchange was conducting its business unlawfully. The regulator claimed that Coinbase’s staking service should have registered at least 13 cryptocurrency assets as securities. Tokens like Solana (SOL), Cardano (ADA), Polygon (MATIC), and The Sandbox (SAND) were included.
Coinbase SEC Case: Impact on Cryptocurrency Regulation
A Coinbase spokesman responded to the Financial Times article. They emphasized that the opinions expressed might have represented some SEC employees but not the Commission’s overall viewpoint. The exchange stated they are in contact with the SEC. They believe open rulemaking and congressional action are best for American firms and crypto users.
Notably, Gary Gensler, the chair of the SEC, has previously stated that the SEC might regard cryptocurrency outside Bitcoin as securities. Frequently, he emphasized protecting investors in the cryptocurrency field, comparing it to “the Wild West.” The SEC didn’t include Ethereum (ETH) in the June lawsuit against Coinbase. The SEC did not assess Ethereum as a security. It is the second-largest cryptocurrency by market value.
Asserting that the SEC lacked legislative authority over the exchange and that its view on its power was legally untenable, Coinbase filed a motion to dismiss the SEC’s action on June 28.
The cryptocurrency community closely monitors the Coinbase SEC case. The outcome could heavily impact the regulation of cryptocurrencies in the United States. Coinbase remains determined to pursue legal action in court. They seek a decision on the fate of cryptocurrencies after Bitcoin’s loss of security status.