SEC Pressures Coinbase to Suspend Trading of All Crypto Assets, Excluding Bitcoin
In a recent revelation, Coinbase CEO Brian Armstrong disclosed that the U.S. Securities and Exchange Commission (SEC) had urged the popular exchange to halt trading activity for all digital assets, with the exception of Bitcoin. The request came before the SEC filed a lawsuit against Coinbase last month, accusing the platform of failing to register as a broker.
During an interview with the Financial Times, Armstrong recounted the SEC’s stance, stating,
“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 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.”
The lawsuit, which triggered the regulatory showdown, specifically identified 13 assets, including SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO, as securities. The SEC also accused Coinbase of evading the disclosure requirements set by Congress for U.S. securities markets by never registering with the commission as a broker, national securities exchange, or clearing agency.
Armstrong emphasized that complying with the SEC’s request would have sent the wrong message, potentially pushing many American crypto businesses into operating unlawfully unless they registered with the commission. He stated,
“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. It kind of made it an easy choice… let’s go to court and find out what the court says.”
The distinction between securities and non-securities in the crypto industry recently received some clarity during the SEC-Ripple case, in which XRP was deemed a non-security. However, the judge ruled that institutional sales of the tokens still violated federal securities laws. This ruling is expected to play a significant role in the ongoing Coinbase lawsuit, according to various industry proponents, including top legal experts.
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