Coinbase Allegedly Told by SEC to Delist All Tokens Except Bitcoin
Brian Armstrong, Coinbase's CEO, has revealed that the U.S. Securities and Exchange Commission (SEC) recommended the crypto exchange to suspend trading of all cryptocurrencies, except Bitcoin, prior to initiating a lawsuit against the company.
According to Armstrong, the SEC asserted that all assets other than Bitcoin should be treated as securities, a view contested by Coinbase.
The regulator declined to provide a detailed explanation for its stance, demanding the exchange to delist over 200 tokens, leaving only Bitcoin unaffected.
The SEC's case against Coinbase identifies 13 cryptocurrencies as securities, placing the exchange under the agency's jurisdiction.
However, the request to delist the majority of tokens implies a pursuit of greater control over the crypto industry, under the leadership of Gary Gensler.
Armstrong expressed worry over the potential consequences, as compliance with the SEC's directive could have jeopardized the future of the crypto industry in the U.S.
Consequently, Coinbase decided to take the matter to court to seek clarity on the matter.
The SEC's actions hold significant implications for the entire U.S. crypto industry.
Had Coinbase complied, it could have set a precedent, forcing many American crypto businesses to operate outside the law unless they registered with the commission.
The SEC's approach to crypto regulation has stirred controversy, as it considers most cryptocurrencies, apart from Bitcoin, as securities.
This perspective has influenced the agency's efforts to regulate the industry, as seen in its recommendation to Coinbase.
The SEC filed a complaint against Coinbase on June 6, accusing the company of functioning as an unregistered securities exchange, broker, and clearing agency.
Coinbase, in response to the SEC's lawsuit, filed a motion to dismiss the allegations, arguing that the agency's application of securities laws to certain tokens deviates significantly from established legal practices.
The exchange's chief legal officer, Paul Grewal, denounced the SEC's claims, stating they go beyond the boundaries of existing law.