SEC's Strict Demand: Delist All Assets Except Bitcoin, Coinbase CEO Reveals
The U.S. Securities and Exchange Commission (SEC) reportedly made a forceful request to Coinbase, the largest crypto exchange in America, demanding that they halt trading of all cryptocurrencies except Bitcoin (BTC). The SEC's intention was revealed by Coinbase CEO Brian Armstrong, who disclosed the incident last month. According to Armstrong, the regulatory body deemed all assets other than Bitcoin as securities without providing a clear explanation for their decision. The SEC's alleged demand came in the wake of a lawsuit filed against Coinbase in June, where the commission accused the exchange of operating unlawfully due to its failure to register as an exchange. Furthermore, the SEC asserted that Coinbase's staking service offered at least 13 crypto assets that should have been treated as securities, including tokens like Solana (SOL), Cardano (ADA), Polygon (MATIC), and The Sandbox (SAND). Coinbase defended itself, stating that the Financial Times' report, which revealed the SEC's demands, omitted crucial context about their discussions with the regulatory body. They asserted that the views mentioned in the report might have represented the opinions of some SEC staff at the time but did not necessarily reflect the Commission's broader stance. In response to Decrypt's inquiries, the SEC did not immediately provide any comments regarding the situation. However, Armstrong asserted that had Coinbase complied with the SEC's request, it could have set a dangerous precedent, potentially leading to increased regulatory pressure on numerous other American crypto businesses operating under similar circumstances. The Coinbase CEO stated that they felt they had no other choice but to challenge the SEC's demand in court. The alternative would have been to delist all assets except Bitcoin, which Armstrong argued was not mandated by the law and could have effectively spelled the end of the crypto industry in the United States. Coinbase remains in ongoing discussions with the SEC and believes that transparent and fair rulemaking, along with Congressional action, is the best approach to safeguarding the interests of American crypto users and companies operating in the cryptocurrency space. This incident sheds light on SEC Chair Gary Gensler's stance on cryptocurrencies. Gensler has previously expressed the opinion that all cryptocurrencies, except Bitcoin, should be classified as securities. He has cited concerns about investor protection and likened the crypto sector to the "Wild West," indicating a need for regulatory enforcement. Curiously, the SEC's lawsuit against Coinbase did not mention Ethereum (ETH), the second-largest cryptocurrency by market capitalization, as a security. This omission raised questions about the SEC's views on other major cryptocurrencies and their regulatory status. In response to the SEC's lawsuit, Coinbase filed a motion to dismiss, challenging the agency's authority over the exchange. The company argued that the SEC's position regarding its powers was legally untenable. The outcome of this legal battle could have far-reaching implications for the cryptocurrency industry in the United States. In conclusion, Coinbase's revelation of the SEC's demand to delist all assets except Bitcoin highlights the challenges and complexities surrounding crypto regulations in the U.S. The dispute between the SEC and Coinbase underscores the need for transparent and well-defined regulatory guidelines to foster a thriving cryptoeconomy while ensuring investor protection. As the legal proceedings continue, the industry watches closely for potential outcomes that could shape the future of cryptocurrencies in the United States.