The U.S. Securities and Exchange Commission (SEC) had asked Coinbase to cease trading in all cryptocurrencies except bitcoin (BTC) before taking legal action against America’s biggest crypto exchange last month. This is according to a Financial Times report citing CEO Brian Armstrong.
Armstrong: SEC Directive To Halt Trading For All Cryptocurrencies Except Bitcoin Would End Crypto
Coinbase chief Brian Armstrong has disclosed that the SEC pressured the company to delist all crypto assets apart from Bitcoin.
“They came back to us, and they said [. . .] we believe every asset other than bitcoin is a security,” said Armstrong. “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.”
It’s a similar view held by the SEC chairperson Gary Gensler, who asserted in a February interview that “everything other than Bitcoin” is a security under the commission’s purview.
As per Armstrong, if his company had complied with the request, it would have led to a bad precedent and might have prompted the regulator to crack down on most crypto businesses in the U.S. operating under similar conditions.
“We really didn’t have a choice at that point; 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 US,” said Armstrong. “It kind of made it an easy choice [. . .] let’s go to court and find out what the court says.”
The SEC reportedly told the Financial Times that its enforcement division did not make any formal requests for the exchange to delist crypto assets.
In a June 6 suit, the SEC alleged that Coinbase was operating without registering as an exchange. The Wall Street regulator also claimed that the exchange’s staking service offered at least 13 cryptocurrencies that are actually securities, including tokens such as Solana (SOL), Cardano (ADA), Polygon (MATIC), and The Sandbox (SAND).
A day earlier, the SEC filed a similar complaint against Binance. The agency also alleged that Binance CEO Changpeng “CZ” Zhao and the cryptocurrency exchange misused and commingled customers’ funds.
The regulatory environment for cryptos in the U.S. remains murky despite Ripple scoring a partial victory in a case against the SEC, with the judge ruling that Ripple’s XRP token is not a security.
The Commodity Futures Trading Commission (CFTC) and the SEC have both lodged enforcement actions against industry leaders, contributing to the increasing regulatory uncertainty.