During his recent interview with Financial Times, Coinbase chief Brian Armstrong said that the U.S. Securities and Exchange Commission (SEC) asked them to halt trading for all 200 cryptocurrencies listed on the platform except for Bitcoin, before suing the exchange back in early June 2023.
Coinbase CEO said that SEC believed that every cryptocurrency apart from Bitcoin qualifies as a ‘security’. It was clear that the federal securities regulator was trying to assert authority over the broader section of the market.
In its lawsuit, the US SEC identified 13 most lightly traded digital assets on Coinbase, as securities. The regulator further asserted that offering them further to customers would put the exchange under the purview of the SEC. Armstrong said:
“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 the conclusion, because that’s not our interpretation of the law. And they said, we are not going to explain it to you, you need to delist every other asset other than Bitcoin”.
Armstrong added that had Coinbase succumbed to the SEC’s demands, it could have set a wrong precedent leaving a large majority of US crypto businesses operating outside the law unless they register with the Commission. Basically, it seems that the SEC was trying to arm-twist Coinbase while the exchange refused to give up easily.
Last month, crypto exchange Coinbase filed a motion to dismiss all charges from the US SEC. Coinbase stated that even though it didn’t register with the SEC as a broker, it denies offering any crypto asset securities for trading.
Additionally, Coinbase refutes the SEC’s authority over investors and rejects the notion that laws or SEC regulations necessitate segregation of functions. The Chief Legal Officer, Paul Grewal, expresses openness to engage in a dialogue with financial watchdogs and advocates for new legislation and rulemaking moving forward.
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