Gensler has consistently stated that most cryptocurrencies, except Bitcoin, should be treated as securities.
Leading American cryptocurrency exchange, Coinbase is entangled in a regulatory showdown with the US Securities and Exchange Commission (SEC) over its trading practices. According to an interview with the Financial Times, Coinbase CEO Brian Armstrong said the SEC requested the exchange to suspend trading of all digital assets listed on the platform except for Bitcoin (BTC) before initiating a lawsuit against the firm in June.
Recall that the SEC’s lawsuit alleged that the exchange violated securities laws by facilitating unregistered trading in 12 digital tokens, considered securities. However, the financial watchdog requested the company to delist over 200 tokens traded on the platform except BTC to escape the lawsuit.
“They came back to us, and they said . . . we believe every asset other than bitcoin is 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,” said Coinbase CEO.
Set Unfavorable Precedent for American Businesses
The Coinbase boss believes the SEC’s request would have far-reaching implications for the crypto industry, as compliance with the proposal to delist most assets would have meant severe restrictions for American crypto businesses unless they registered with the commission.
“If Coinbase had agreed, that could have set a precedent that would have left the vast majority of the American crypto businesses operating outside the law unless they registered with the commission,” said Armstrong.
Under the leadership of SEC Chair Gary Gensler, the regulator has intensified its pursuit of regulatory control in the crypto market.
Gensler has consistently stated that most cryptocurrencies, except Bitcoin, should be treated as securities. The recent directive to Coinbase, urging them to remove all tokens except for BTC, exemplifies the SEC’s determined efforts to expand its oversight over the rapidly evolving industry.
Coinbase Fights Back against SEC’s Lawsuit
The securities watchdog sued Coinbase when the exchange refused to comply with its demand, claiming that the publicly traded firm violated US federal laws.
Responding to the lawsuit, Coinbase filed a rebuttal motion to dismiss the suit, arguing that the SEC’s claims extend beyond existing legal frameworks.
The company’s Chief Legal Officer, Paul Grewal, also emphasized the need for clarity in regulatory guidelines to foster responsible innovation in the crypto market.
While responding to Coinbase’s demand for regulatory clarity, the market watchdog said the commission is not in a hurry to provide a clear regulatory framework to govern the emerging economy, noting that it may take years for the agency to develop proper rules.
Earlier this month, the SEC put forward another claim before a federal judge in New York, arguing that Coinbase “adopted the very legal framework as a basis for making listing decisions that it now claims has no applicability to its activities.”