The U.S. Securities and Exchange Commission (SEC) has made a monumental move. It asked Coinbase to halt trading all cryptocurrencies except Bitcoin. This surprising directive came before a lawsuit the SEC filed against Coinbase in June. The news came to light through Brian Armstrong, CEO of Coinbase, in an interview with the Financial Times.
Armstrong indicated that the SEC’s directive put the entire U.S. crypto industry at risk. Accepting such an order contradicts existing laws, he said. Therefore, Coinbase decided to contest the directive in court.
The SEC’s lawsuit argues that Coinbase operates illegally. It alleges that Coinbase failed to register as an exchange. Furthermore, the SEC claims Coinbase traded 13 unregistered crypto assets, including Solana, Cardano, and Polygon.
Coinbase and SEC Clarify Their Positions
However, the SEC has offered a counterpoint. In response to the allegations, it stated that formal requests to delist crypto assets were not standard. In investigations, the SEC might share views on activities that might pose regulatory questions.
On its part, Coinbase has dismissed the SEC’s claims. A spokesperson argued that the SEC did not formally state all assets apart from Bitcoin were securities. They added that such significant requests require a full commission vote.
Coinbase continues to engage with the SEC. They maintain that transparent rulemaking and legislative action are the best paths forward for U.S. crypto users and firms.
The Greater Context: SEC’s Growing Crypto Oversight
This Coinbase-SEC dispute is part of a larger regulatory crackdown on the crypto industry. The SEC, led by Gary Gensler, is pushing to assert its authority over the crypto market. The regulator filed a lawsuit against Binance in June, signalling a broader regulatory push.
Gensler refers to the crypto industry as a “Wild West.” He believes it undermines U.S. capital markets. However, crypto firms counter that the SEC’s rules are unclear, accusing it of overreaching.
The outcome of this legal tug-of-war could set a precedent for U.S. cryptocurrency regulation. It represents a key moment in the conflict between the rapidly evolving crypto industry and regulatory bodies trying to catch up. The result will impact not only Coinbase but also the future of the entire U.S. crypto industry.