Coinbase, the prominent cryptocurrency exchange, was reportedly urged by the United States Securities and Exchange Commission (SEC) to remove all cryptocurrencies from its platform, except for Bitcoin (BTC).
This revelation came to light during a recent interview with Coinbase CEO Brian Armstrong published by the Financial Times on July 31.
According to Armstrong, the SEC demanded the delisting of nearly 250 tokens on Coinbase before initiating legal action against the exchange.
The SEC’s stance was based on its belief that “every asset other than Bitcoin is a security.”
However, Armstrong disagreed with this interpretation, challenging the regulator to explain their reasoning, but they refused, insisting on the complete removal of all tokens besides Bitcoin.
This viewpoint aligns with SEC Chair Gary Gensler’s assertion made in a prior interview that everything apart from Bitcoin falls under the agency’s regulatory purview as a security.
Agreeing to the SEC’s request, Armstrong argued, would have set a dangerous precedent and potentially led to the demise of the entire crypto industry in the United States.
As a result, Coinbase opted to challenge the SEC’s position in court to seek legal clarity.
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The SEC filed a lawsuit against Coinbase in early June, accusing the exchange of operating without proper registration and identifying 13 cryptocurrencies offered on the platform as unregistered securities.
Coincidentally, the regulator also lodged a similar complaint against Binance.
Responding to the situation, the SEC clarified that while its enforcement division does not formally request companies to delist crypto assets, its staff may share their views on actions that might breach securities laws.
Regulation of the crypto industry in the United States has been somewhat ambiguous, with both the Commodity Futures Trading Commission (CFTC) and the SEC exercising regulatory authority over various aspects of the sector.
To address this regulatory uncertainty, legislation aiming to grant primary jurisdiction over cryptocurrencies to the CFTC and define the SEC’s role concerning crypto was passed by the House Agricultural Committee on July 27, following earlier approval by the House Financial Services Committee.
However, further steps are required for it to become law.
In summary, Coinbase’s confrontation with the SEC regarding the delisting of cryptocurrencies other than Bitcoin reflects the ongoing struggle to establish clear and comprehensive regulations for the crypto industry in the United States.
The outcome of this legal battle could have significant implications for the entire crypto market in the country.
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