Coinbase, the leading American cryptocurrency exchange, is facing a Wells Notice issued by the U.S. Securities and Exchange Commission (SEC) after being accused of offering unregistered securities. In response to the notice, the company’s CEO, Brian Armstrong, and chief legal officer, Paul Grewal, have released a video reiterating their commitment to regulatory compliance and constructive dialogue with regulators.
Following a series of investigations, the SEC’s Wells Notice was issued on March 22, 2023. Armstrong and Grewal expressed their disappointment with the agency’s decision to choose a legal battle over dialogue. In the video, Armstrong emphasized that the U.S. government has yet to develop clear rules for the crypto industry and that Coinbase’s commitment to regulatory compliance has not wavered.
“We are committed to working within the regulatory perimeter, and we want to see a clear market structure for trading crypto securities. Not all crypto assets are securities. There are also crypto commodities, there are stablecoins, there’s crypto that’s artwork. We’re going to work with multiple regulators to make this industry safe and trusted,” Armstrong said.
Coinbase’s Commitment to Compliance
Armstrong also argued that issuing a Wells Notice at this stage is unconstructive, as the lack of clear regulations for the crypto industry makes it difficult for companies to comply with securities laws. However, he maintained that Coinbase is prepared to defend its position in court and is also ready for constructive dialogue with regulators.
Grewal echoed Armstrong’s views, stating that Coinbase does not list securities due to its robust process based on the SEC’s guidance. He revealed that the exchange rejects about 90% of the assets reviewed for listing, indicating that the company takes regulatory compliance seriously.
Coinbase’s Request for a Clear Market Structure
Coinbase has been vocal about the need for a clear market structure for trading crypto securities. Armstrong emphasized that not all crypto assets are securities and that there are other types of crypto, such as commodities and artwork. He also stressed the importance of working with multiple regulators to make the industry safe and trusted.
The exchange’s commitment to regulatory compliance is further highlighted by its rejection of the recent trend of staking, which some see as a means of circumventing securities laws. Coinbase has also been vocal about the need for clear guidelines for stablecoins, which have come under scrutiny from regulators due to concerns over their potential impact on financial stability.