In a recent interview with Financial Times, Coinbase CEO Brian Armstrong revealed that the US Securities and Exchange Commission (SEC) asked the exchange to suspend trading in all cryptocurrencies except bitcoin before taking legal action against it. The SEC's move indicated a clear intention to exert regulatory control over a broader scope of the crypto market.

According to Brian Armstrong, the SEC made this recommendation based on their view that 13 cryptocurrencies offered on Coinbase's platform were securities. Consequently, the SEC accused the exchange of operating as an unregistered broker.

"They came back to us, and they said... we believe every asset other than bitcoin is a security... we're not going to explain it to you, you need to delist every asset other than bitcoin," said Armstrong. 

Compliance would have set a precedent potentially forcing many American crypto businesses to operate outside the law unless registered with the SEC.

Choosing to contest the recommendation in court, Armstrong said, "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. It kind of made it an easy choice... let's go to court and find out what the court says."

Oversight of the crypto industry has been unclear, with both the SEC and the Commodity Futures Trading Commission vying for authority. Earlier this year, the CFTC sued Binance, the largest crypto exchange, and the SEC followed suit three months later.

Gary Gensler's stance on most cryptocurrencies, excluding bitcoin, being securities aligns with the SEC's recent actions. However, it is noteworthy that ether, the second-largest cryptocurrency, was not included in the SEC's case against Coinbase, nor in the list of "crypto asset securities" mentioned in the lawsuit against Binance.

This legal dispute underscores the ongoing regulatory challenges and efforts to define and control the crypto industry.

What is Coinbase?

Coinbase is one of the oldest cryptocurrency exchanges in the world. The exchange was founded by Brian Armstrong and Fred Eshram back in 2012. While Armstrong remains at the helm of the exchange as the CEO, Eshram left the company in 2017 but still owns 6% of the equity and serves on the board of directors. Coinbase (COIN) became the first cryptocurrency firm and exchange to trade on Nasdaq starting on April 14, 2021. The stock has even briefly surpassed a market capitalization of $100 billion, although its market cap is just over $15 billion at the time of writing.

Find more about Coinbase here:

Website | Twitter | Blog |