Coinbase CEO stated that complying with the SEC could have impacted several US crypto firms.
During a recent interview with Financial Times, Coinbase CEO Brian Armstrong stated that the U.S. Securities and Exchange Commission (SEC) asked them to halt trading for all 200 cryptocurrencies on the platform, except for Bitcoin, before suing the exchange in early June 2023.
According to the CEO of Coinbase, every cryptocurrency other than Bitcoin qualifies as a “security” in the eyes of the SEC. It was obvious that the federal securities regulator was attempting to impose its control over a wider swath of the market.
13 of the least actively traded digital assets on Coinbase were named as securities in the US SEC’s lawsuit. The regulator claimed further that making them available to customers would subject the exchange to SEC regulation. 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 the conclusion, because that’s not our interpretation of the law. And they said, we are not going to explain it to you, you need to delist every other asset other than Bitcoin”.
Armstrong added that if Coinbase accepted the SEC’s demands, it could have set an undesirable precedent that would have led to a large majority of US crypto companies breaking the law unless they registered with the Commission. In essence, it appears that the SEC tried to pressure Coinbase while the exchange resisted giving up readily.
SEC vs. Coinbase
Coinbase, a cryptocurrency exchange, submitted a motion to dismiss all charges from the US SEC last month. Coinbase asserted that, although not registered with the SEC as a broker, it does not offer any crypto asset securities for trading.
Additionally, Coinbase disputes the SEC’s jurisdiction over investors and disputes the idea that functional separation is required by law or SEC regulations. The Chief Legal Officer, Paul Grewal, shows his willingness to actively participate in discussions with financial watchdogs and advocates for fresh legislation and rulemaking moving forward.